Directions: Answer the following 10 questions on the provide…
Directions: Answer the following 10 questions on the provided spreadsheet. Click HERE to open the spreadsheet in a new tab. Provide your answers on this spreadsheet. There is one sheet for each problem. Click the tabs at the bottom of the page to access each question. You may need to add rows to enter your answers. NOTE: Make sure to round all your answers to two decimal places. Once finished, press the CLICK HERE TO SAVE YOUR WORK yellow button and then follow the directions provided to paste the resulting URL in the answer field below. Click Submit Quiz to finish your assessment. What is the amount of money two years ago that is equivalent to $1000 now at 10% per year compound interest? ABC company has just purchased a life truck that has a useful life of 5 years. The engineer estimates that maintenance costs for the truck during the first year will be $1,200. As the truck ages, maintenance costs are expected to increase at a rate of $300 per year over the remaining life. Assume that the maintenance costs occur at the end of each year. The firm wants to set up a maintenance account that earns 10% interest per year. All future maintenance expenses will be paid out of this account. How much does the firm have to deposit in the account now? Suppose that your retirement benefits during your first year of retirement are $80,000 per year which is just enough to meet your cost of living during the first year. However, your cost of living is expected to increase at an annual rate of 4.5% due to inflation. If there is no cost-of-living adjustment in your retirement pension, then some of your future living cost has to come from savings other than retirement pension. If your saving account earns 9% interest a year, how much should you set aside in order to meet this future increase in the cost of living for 25 years? You borrowed $18,000 to finance the education expenses for your senior year of college at the beginning of your senior year. The loan will be paid off over five years and the first installment will be due a year later. The loan carriers an interest rate of 7.5% per year and is to be repaid in equal annual installments over the next five years. Suppose you want to negotiate with the bank to defer the first loan installment until the end of year 2. (But you still desire to make five equal installments at 7.5% interest.) If the bank wishes to earn the same profit, what should be the new annual installment? In order to have money for their son’s college education, a young couple started a savings plan into which they made intermittent deposits. They started the account with a deposit of $6,000 (in year zero) and then added $5,000 in years two, five, seven, and added $6,000 in year nine and ten. What is the amount they had in the account in year ten if they earned interest at 12% per year? How much money was deposited each year for 10 years if the account is now worth $800,000 and the last deposit was made 10 years ago? Assume the account earned interest at 15% per year. What is the effective interest rate per quarter as a nominal rate of 8% per year compounded continuously? Suppose you want to buy a car. Sale price of the car is $18,427. You can afford to make a down payment of $6,427. The net amount to be financed is $12,000. If the dealer offers 5 year at 7.25% APR (compound monthly), what would the monthly payment be? Suppose you make equal quarterly deposit of $6,000 into a fund that pays interest at a rate of 10% per year compounded monthly. What is the balance at the end of year 20? Suppose you make $500monthly deposits into a tax-deferred retirement plan that pays interest at a rate of 10% per year compound quarterly. Suppose that money deposited during a quarter will not earn any interest. What is the balance at the end of 20 years?
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