Author Question: You have just turned 25 and may now spend a portion of the trust fund your parents established for ... (Read 99 times)

asd123

  • Hero Member
  • *****
  • Posts: 557
You have just turned 25 and may now spend a portion of the trust fund your parents established for you. The terms of the trust fund allow you to withdraw 60 beginning-of-the-year cash flows of 100,000 each.
 
  An investment firm has offered to pay you cash for all of the fund today. If the rate they use to discount the cash flows is 16 per year, what is their offer price today for your pension fund?
  A) 4,605,750,853
  B) 6,000,000.00
  C) 624,915.20
  D) 724,901.63

Question 2

You are saving for your child's university education. It is her 1st birthday today. She will start university just after her 19th birthday. You are going to save 2,000 per year each year starting today and ending on her 18th birthday.
 
  If you expect to earn a rate of 5 in the savings account, then how much will you have saved by her 19th birthday?
  A) 56,264.77
  B) 59,078.01
  C) 61,078.01
  D) 64,131,91
  E) 54,264.77



vickyvicksss

  • Sr. Member
  • ****
  • Posts: 351
Answer to Question 1

Answer: D
Explanation: D)
PV = PMT   (1 + r)1 = 60,000   (1.16)1 = 724,901.63.
MODE = BEGIN
INPUT 60 16 ? -60,000 0
KEY N I/Y PV PMT FV
CPT 724,901.63

Answer to Question 2

B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

According to the American College of Allergy, Asthma & Immunology, more than 50 million Americans have some kind of food allergy. Food allergies affect between 4 and 6% of children, and 4% of adults, according to the CDC. The most common food allergies include shellfish, peanuts, walnuts, fish, eggs, milk, and soy.

Did you know?

On average, someone in the United States has a stroke about every 40 seconds. This is about 795,000 people per year.

Did you know?

In most climates, 8 to 10 glasses of water per day is recommended for adults. The best indicator for adequate fluid intake is frequent, clear urination.

Did you know?

The largest baby ever born weighed more than 23 pounds but died just 11 hours after his birth in 1879. The largest surviving baby was born in October 2009 in Sumatra, Indonesia, and weighed an astounding 19.2 pounds at birth.

Did you know?

Persons who overdose with cardiac glycosides have a better chance of overall survival if they can survive the first 24 hours after the overdose.

For a complete list of videos, visit our video library