1st exam study problems #1 solutions

# 1st exam study problems #1 solutions - 1st exam study...

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1st exam study problems #1 ANSWERS 1. I deposit \$2000 now at an interest rate of 4.75% per year. How much will I accumulate in 7 years? a. Solve for FV: \$2,767.63 2. How many years would it take me to save \$12,000 if I deposit \$400 now and earn interest at a rate of 6.8% per year? a. Solve for NPER: 51.7 years 3. What is the value today of \$1,200,000 I expect to inherit 27 years from today if the inflation rate (think interest rate) is 3.2% per year? a. Solve for PV: \$512,660 4. I plan to invest \$2600 now with hopes of growing it to \$5000 in 4 years. What rate of return in % per month do I need to accomplish this goal? a. 4 years is equal to 48 months b. Solve for RATE Excel 1.37% per month Formula 1.37% per month 5. I purchase a car today for \$35,000. Terms of the deal are 4% down with the balance financed over 60 months at an interest rate of 0.48% per month. What is my monthly payment?. a. Compute amount to be financed: \$33,600.00 b. Solve for PMT \$645.84 per month 6. I start a college savings program. I expect to need \$85,000 in 16 years. If I deposit \$1500 now from a bonus check and save \$250 each month, How much more will I have to deposit in 5 years to achieve my goal
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