Sylvia wants to buy a car and feels that she can afford payments of $230 per month
Question:
Sylvia wants to buy a car and feels that she can afford payments of $230 per month (month-end payments) for five years.
Using an interest rate of j12=4.8%, what is the most expensive car that she can buy?
2. Mark has just set up a retirement plan where he will deposit $300 at the end of each month for the next 20 years until he retires.
If the account earns j4=4.08%, how much money will be in Mark's account when he retires?
3. How much would an investor be willing to pay for an investment that guaranteed payments of $4,000 at the end of every six months for the next 10 years if they wished to earn a nominal return of j2=8%?
4. Dan is saving for a down payment on a house. If he saves $250 at the end of each month for 4 years, how much will he have? His savings account earns j2=2%.
5. Mika has already saved $77,090 in her retirement savings plan (RSP). If she contributes an additional $250 at the end of every 3 months until she retires in 15 years, how much will she have in the account on the day she retires? Assume that her account will earn 5% compounded quarterly (j4).
6. Carol is selling her small business and has just received an offer of $25,000 now plus year-end payments of $10,000 for each of the next 5 years.
Assuming an interest rate of 7.39% compounded annually (j1), calculate the value of the offer in today's dollars.