exam1d.ch1ch2ch2Ach5ch5A - Name Peoplesoft ID University of...

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Name __________________________________ Peoplesoft ID __________________________________ University of Houston C. T. Bauer College of Business Finance 3332 Principles of Financial Management Spring, 2010 Exam 1D Point values are in parentheses. To receive full credit: Show all work—equations in variable form & equations with numbers plugged in Clearly indicate your answer Financial functions may be used only for finding annuity factors All inputs to find annuity factor must be shown Carry all decimals, rounding only final answer Decimal places should be rounded to four places (two in percent form) Currency answers rounded to the nearest cent, where applicable Include applicable units on answers 1. How much should your firm charge its clients for a retirement annuity that pays $120,000 per year for 15 years, with the first payment being received in 30 years, if your firm requires a return of 8 percent for products of this type? (10) 2. Krissy plans to retire in twenty-five years and needs to have $6,000,000 in her account when she retires. How much must she save each year over the next 25 years if her account earns 7 percent per year and she currently has $250,000 saved in her retirement account? (10) 3. A ___________ option is a financial security that gives that holder of the option the right to buy a specified asset at a specified strike price on or before a specified expiration date. (2) 4. Jeremy is saving for a vacation and wants to have $12,000 available in 6 years. How much must he save each year if his savings account earns 5 per cent per year? (6)
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