Tutorial 1 Problems

# Tutorial 1 Problems - PROBLEMS FOR TUTORIALS 1 2(January...

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1 of 4 PROBLEMS FOR TUTORIALS 1 & 2 (January 15 th nd ) Question-1 Calculate the future value of \$2,000 in: a) 5 years at an interest rate of 5% per year. b) 10 years at an interest rate of 5% per year. Question-2 Your daughter is currently 8 years old. You anticipate that she will be going to college in ten years. You would like to have \$100,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 3% per year, how much money do you need to put into the account today to ensure that you will have \$100,000 in ten years? Question-3 Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has \$3996 in it and pays an 8% interest rate. a) How much money would be in the account if you left the money there until your 25 th birthday? b) How much money did your grandfather originally put in the account? Question-4 Your bank is offering you an account that will pay 20% interest in total for a two-year deposit. Determine the equivalent discount rate for a period length of: a) Six months. b) One month. Question-5 Your bank account pays interest with an EAR of 5%. What is the APR quote for this account based on semiannual compounding? Using the formula for converting from an EAR to an APR quote Question-6 Capital One is advertising a 60-month, 5.99% APR compounded monthly motorcycle loan. If you need to borrow \$8,000 to purchase your dream Harley Davidson, what will your monthly payment be?

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2 of 4 Question-7 You have credit card debt of \$25.000 that has an APR (monthly compounding) of 15%. Each month you pay minimum monthly payment only. You are required to pay only the
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Tutorial 1 Problems - PROBLEMS FOR TUTORIALS 1 2(January...

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