Author Question: Your parents plan to spend 20,000 on a car for you upon graduation from college. If you will ... (Read 90 times)

abarnes · **on:** Jul 10, 2018

Your parents plan to spend 20,000 on a car for you upon graduation from college. If you will graduate in three years and your parents can earn 4.125 annually on their investment, how much money must they set aside today for your car?

A) 20,000
B) 17,704
C) 17,716
D) 16,387

Question 2

An investment promises a payoff of 195 two and one-half years from today. At a discount rate of 7.5 per year, what is the present value of this investment?

A) 162.03
B) 162.75
C) 169.47
D) There is not enough information to answer this question.

isabelt_18 · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: C
Explanation: C) PV = = = 17,715.97
MODE = END
INPUT 3 4.125 ? 0 -20,000
KEY N I/Y PV PMT FV
CPT 17,715.97

Answer to Question 2

Answer: B
Explanation: B) PV = = 162.75
MODE = END
INPUT 2.5 7.5 ? 0 -195
KEY N I/Y PV PMT FV
CPT 162.75