Author Question: You have just turned 25 and may now spend a portion of the trust fund your parents established for ... (Read 97 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?

There are over 65,000 known species of protozoa. About 10,000 species are parasitic.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

In the United States, there is a birth every 8 seconds, according to the U.S. Census Bureau's Population Clock.

Did you know?

Your heart beats over 36 million times a year.

Did you know?

It is difficult to obtain enough calcium without consuming milk or other dairy foods.

For a complete list of videos, visit our video library