60.1K

Verified Solution

Link Copied!

Check my Exercise B-18 Practical applications of the time value of money LO P1, P2, P3, P4 Provided are links to the present and future value tables: (PV of $1, FV of $1, PVA of $1. and EVA of $1) (Use appropriete factor(s) from the tables provided.) a. How much would you have to deposit today if you wanted to have $60,000 in four years? Annual interest rate is 9 % b. Assume that you are saving up for a trip around the world when you graduate in two years. If you can earn 8 % on your investments, how much would you have to deposit today to have $15,000 when you graduate? (Round your answer to 2 decimal places.) c-1. Calculate the future value of an investment of $463 for 10 years earning an interest of 9% (Round your answer to 2 decimal places.) c-2. Would you rather have $463 now or $1,000 ten years from now? d. Assume that a college parking sticker today costs $90. If the cost of parking is increasing at the rate of 5 % per year, how much will the college parking sticker cost in eight years? (Round your answer to 2 decimal places.) e. Assume that the average price of a new home is $158,500. If the cost of a new home is increasing ath rate of 10% per year, how much will a new home cost in eight years? (Round your answer to 2 decimal pleces.) f. An investment will pay you $10,000 in 10 years, and it also will pay you $400 at the end of each of the next 10 years (years 1 through 10) If the annual interest rate is 6 %, how much would you be willing to pay today for this type of investment? (Round your answer to nearest whole dollar.) g. A college student is reported in the newspaper as having won $10,000,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $10 million now. Instead she will receive $500,000 at the end of the year for each of the next 20 years. If the annual interest rate is 6 %, what is the present value (today's amount) that she won? (Ignore taxes) 54:07 ok t k nt ences 4.2505 80 Present value BARC e. Assume that the average price of a new home is $158,500. If the cost of a new home is increasing at a rate of 10% per year, how much will a new home cost in eight years? (Round your answer to 2 decimal places.) f. An investment will pay you $10,000 in 10 years, and it also willl pay you $400 at the end of each of the next 10 years (years 1 through 10). If the annual interest rate is 6 %, how much would you be willing to pay today for this type of investment? (Round your answer to nearest whole dollar.) g. A college student is reported in the newspaper as having won $10,000,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $10 million now. Instead she will receive $500,000 at the end of the year for each of the next 20 years. If the annual interest rate is 6% , what is the present value (today's amount) that she won? (Ignore taxes) Present value a. 4.2505.80 12,860 10 1,096.09 b. Present value S c-1. Future value c-2. Would you rather have $463 now or $1,000 ten years from now? Now Future value d. Future value e. Present value Present value

Answer & Explanation Solved by verified expert

See Answer