5.50%
PV
-$500,000
PMT
$45,000
FV
$50,000
N
15.05
a.
$1,412.84
b.
$1,487.20
c.
$1,565.48
d.
$1,643.75
e.
$1,725.94
Answer: c
BEGIN Mode
N
3
I/YR
5.5%
PMT
$550
FV
$0.00
PV
-$1,565.48
Therefore, to receive $550 at the beginning of each year for 3 years at 5.5%, the fair value you should pay
is $1,565.48
5.
Your aunt has $500,000 invested at 5.5%, and she now wants to retire.
She wants to withdraw $45,000 at
the beginning
of each year, beginning immediately.
She also wants to have $50,000 left to give you when
she ceases to withdraw funds from the account.
For how many years can she make the $45,000
withdrawals and still have $50,000 left in the end?
a.
15.05
b.
16.36
c.
17.22
d.
18.08
e.
18.99
Answer: a
BEGIN Mode
6.
How much do you need to save each year from two years from today and onward so that you can have
$1,000 six years from today at 10% interest rate?
a.
$150
b.
$164
c.
$173
d.
$183
e.
$190
Answer: b
N=5, I/Y=10, FV=1,000 => PMT = -163.80
7.
Jennifer can make a 100,000 down payment to buy a house. The house is $380,000 and she was offered 30-
year mortgage and 15-year mortgage at a market rate of 12%. How much more interest would Jennifer pay