FIN 300 TVOM Solutions SPR 2019.pdf

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

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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
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