FIN 300 TVOM Solutions SPR 2019.pdf

FIN 300 TVOM Solutions SPR 2019.pdf - TIME VALUE OF MONEY...

This preview shows page 1 out of 1 page.

TIME VALUE OF MONEY QUIZ SOLUTIONS (Two versions) 1. Barry Cuda currently has $15,000 in his Roth IRA which has been earning 6%. Barry is planning on depositing $6000 annually for the next 20 years into this IRA. Assuming Barry's IRA continues earning 6% annually, what will Barry's IRA be worth at the end of 20 years? 15,000 (D-16%,20 = 3.207) = 48,105 5,000 (D-26%,20 = 36.786) = 220,716 $268,821 25,000 (D-15%, 25 = 3.386) = 84,650 5,000 (D-25%, 25 = 47,727) = 238,635 $323,285 2. Bob Katz has been saving $4500 annually for the past 10 years in an account earning 7%. Bob would like to have a total of $150,000 by the end of eight more years. How much will Bob now need so save each year for the next eight years to reach his $150,000 goal (using 7%)? 4500 X (D-27%, 10 = 13.816) = 62,172 150,000 62,172 = 87,828 / (D-27%, 8 = 10.260) = $8560 6000 X (D-28%, 15 = 27.152) = 162,912 200,000 162,912 = 37,088 / (D-28%, 4 = 4,506) = $8231 3. Bob Katz is purchasing a new Honda Pilot for $38,000. He is financing $35,000 with a six year, 4% loan with annual payments. Construct an amortization schedule, in the 2nd
Image of page 1
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern