1.island News purchased a piece of property for $1.82 million. The firm paid a down payment of 20 percent in cash and financed the balance. The loan terms require monthly payments for 20 years at an APR of 4.3 percent, compounded monthly. What is the amount of each mortgage payment? 2 You just settled an insurance claim that calls for increasing payments over a 8-year period. The first payment will be paid one year from now in the amount of $7,000. The following payments will increase by 3.8 percent annually. What is the value of this settlement to you today if you can earn 6.5 percent on your investments?
3.Your anticipated wedding is three years from today. You don't know who your spouse will be but you do know that you are saving $7,000 today and $12,000 one year from today for this purpose. You also plan to pay the final $11,000 of anticipated costs on your wedding day. At a discount rate of 7.7 percent, what is the current cost of your upcoming wedding?
4.Your grandmother will be gifting you $120 at the end of each month for four years while you attend college. At a discount rate of 3.9 percent, what are these payments worth to you on the day you enter college?
5.You would like to provide $119,000 a year forever for your heirs. How much money must you deposit today to fund this goal if you can earn a guaranteed 8.3 percent rate of return?
6.Your insurance agent is trying to sell you an annuity that costs $40,000 today. By buying this annuity, your agent promises that you will receive payments of $220 a month for the next 21 years. What is the rate of return on this investment?
7.Southern Tours is considering acquiring Holiday Vacations. Management believes Holiday Vacations can generate cash flows of $218,000, $224,000, and $234,000 over the next three years, respectively. After that time, they feel the business will be worthless. If the desired rate of return is 10.4 percent, what is the maximum Southern Tours should pay today to acquire Holiday Vacations?
8.An annuity that pays $14,000 a year at an annual interest rate of 4.59 percent costs $151,000 today. What is the length of the annuity time period?
9.Troy will receive $7,317 at the end of Year 2. At the end of the following two years, he will receive $5,611 and $2,473, respectively. What is the future value of these cash flows at the end of Year 6 if the interest rate is 4 percent?
10.A new sports coupe costs $41,750 and the finance office has quoted you an APR of 6 compounded monthly, for 36 months. What is the EAR?
11.Sue plans to save $3,642, $0, and $5,769 at the end of Years 1 to 3, respectively. What will her investment account be worth at the end of the Year 3 if she earns an annual rate of 4.15 percent?
12.Your broker is offering 2.9 percent compounded daily on its money market account. If you deposit $2,500 today, how much will you have in your account 13 years from now?
13.Your car dealer is willing to lease you a new car for $180 a month for 36 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 4.2 percent, what is the current value of the lease?
14.You are considering two savings options. Both options offer a rate of return of 6.4 percent. The first option is to save $1,500, $1,500, and $3,000 at the end of each year for the next three years, respectively. The other option is to save one lump sum amount today. You want to have the same balance in your savings account at the end of the three years, regardless of the savings method you select. If you select the lump sum method, how much do you need to save today?
15.You just won the grand prize in a national writing contest! As your prize, you will receive $570 a month for 48 months. If you can earn 3.5 percent on your money, what is this prize worth to you today?
16. You just obtained a loan of $19,000 with monthly payments for four years at 6.06 percent interest, compounded monthly. What is the amount of each payment?
17.Today, you borrowed $5,400 on a credit card that charges an interest rate of 12.8 percent, compounded monthly. How long will it take you to pay off this debt assuming that you do not charge anything else and make regular monthly payments of $90?