1. If you deposit $9,000 in a bank account that pays 11% interest annually, how much will be in your account after 5
years
? Do not round intermediate calculations. Round your answer to the nearest cent.
$
2. What is the present value of a security that will pay $30,000 in 20
years
if securities of equal risk pay 12% annually? Do not round intermediate calculations. Round your answer to the nearest cent.
$
3. Your parents will retire in 28 years. They currently have $260,000 saved, and they think they will need $1,700,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don’t save any additional funds? Round your answer to two decimal places.
%
4. If you deposit money today in an account that pays 8.5% annual interest, how long will it take to double your money? Round your answer to two decimal places.
years
5. You have $13,787.57 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $240,000. You expect to earn 11% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number.
years
6. What’s the future value of a 7%, 5-year ordinary annuity that pays $200 each year? If this was an annuity due, what would its future value be? Do not round intermediate calculations. Round your answers to the nearest cent.
Future Value of an Ordinary Annuity: $
Future Value of an Annuity Due: $
7. An investment will pay $50 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 11% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent.
Present value: $
Future value: $
8. Sawyer Corporation’s 2020 sales were $7 million. Its 2015 sales were $3.5 million.
- At what rate have sales been growing? Round your answer to two decimal places. %
- Suppose someone made this statement: “Sales doubled in 5 years. This represents a growth of 100% in 5 years; so dividing 100% by 5, we find the growth rate to be 20% per year.” Is the statement correct?
For Question 8 I uploaded a screenshot of the statements.
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