1 . $100 today is worth the SAME as $100 tomorrow.
False
2. At an interest rate of 12% it is better to have $100 today than $100 in 3 years.
True
3. Shawn wants to buy a new telescope. He estimates that it will take him one year to save the money and that the telescope will cost $300. At an interest rate of 7%, how much does Shawn need to set aside today to purchase the telescope in one year? (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.)
FV=300, r=0.07,nper=1
PV(0.07,1, 0,300)=280
4. Jeff has $1,200 that he invests in a safe financial instrument expected to return 4% annually. Marge has $600 and invests in a more risky venture that is expected to return 8% annually. Who has more after 27 years? And how much does he/she have in FV terms?
A. Jeff; $3,460.04
B. Marge; $4,792.84
C. Jeff; $56,501.06
D. Marge; $52,410.46
FV(Jeff)=FV(0.04, 27, 0, 1200)=3460.04
FV(Marge)=FV(0.08, 27, 0, 600)=4,792.84
选B
5. Don has just received a cash gift of $65,000 from his rich eccentric uncle. He wants to set it aside to pay for his daughter Cynthia's college education. Cynthia will begin college in 13 years and Don's financial advisor says that she can earn 7% interest on an investment in a special college fund. How much will Don have in the fund when Cynthia begins college? (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.)
FV(0.07, 13, 0, 65,000)=156,640
6. Bridgette's grandparents opened a savings account for her and placed $500 in the account. The account pays 3.0% interest. Bridgette wants to be a singer and she has her heart set on a new karaoke machine. The machine costs $150. How much less will the account be worth in 9 years if she buys the karaoke machine now versus leaving the account untouched? (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.)
FV(0.03, 9, 0, 150)=196
7. Joe is getting ready to buy a car. He has $23,000 in investments earning 5.0% annually. The car also costs $23,000. If he doesn't pay cash for the car, Joe can get a loan at 4.3% interest for 4 years. The loan is structured so that Joe pays one balloon payment at the end of 4 years. The balloon payment includes the principal plus all interest accrued over 4 years. If Joe takes the loan will he have enough money available from his investments to make the balloon payment? How much will he be short/have to spare?
A. Yes; $650.79
B. Yes; $738.09
C. No; $650.79
D. No; $738.09
FV(23,000 earning 5%)=FV(0.05, 4, 0,23000)=27957.64
FV(23,000 loan at 4.3%)=FV(0.043, 4, 0,23000)=27219.56
27957.64-27219.56=738.08
He would have 738 to spare.
选B
8. Ralph knows that he is going to have to replace his roof soon. If he has the roof replaced now, it will cost $10,000. He could wait 5 years, but it will then cost him $20,000. At what rate will these options cost the same? This is also known as the break-even point. (Allow two decimals in the percentage but do not enter the % sign.)
FV=-20000, PV=10000, nper=5, rate=?
rate(5, 0, 10000,-20000)=14.87%
9. Jessica is in the market for a new car. She has narrowed her search down to 2 models. Model A costs $28,000 and Model B costs $17,000. With both cars she plans to pay cash and own them for 4 years before trading in for a new car. Her research indicates that the trade in value for Model A after 4 years is 59% of the initial purchase price, while the trade in value for Model B is 31%. Jessica has no emotional attachment to either model and wants to make a strictly financial decision. The interest rate is 4%. For simplicity assume that operating and maintenance costs for the models are identical every year. Which model is the better decision and how much "cheaper" is it than the alternative?
A. Model B; $1,383.45
B. Model B; $11,000.00
C. Model A; $1,383.45
D. Model A; $11,000.00
选A
10. College tuition has been rising at a rate of 5% per year. Currently the average tuition of a state college is $8,500 per year. Andrea's son Trevor will begin college in 9 years. Andrea's portfolio is making 8% annually. How much does Andrea need to have set aside today/now to pay for 4 years of college for Trevor? (Note: Tuition will continue to change annually and Andrea's portfolio balance will continue to accrue interest while Trevor is in school. Also, tuition is due at the beginning of each year.)
A. $34,000.00
B. $23,431.97
C. $24,992.63
D. $25,306.52
suppose PV=X, and we know after four years tuition, the remaining money in the bank is 0
Tuition Fee(TF) required as below.
Year 1 entrance: FV1=FV(0.08， 9， 0， X), then spend TF Year 1
Year 1 entrance: FV2=FV(0.08， 1， 0， F1-TFY1), then spend TF Year 2
Year 1 entrance: FV3=FV(0.08， 1， 0， FV2-TFY2), then spend TF Year 3
Year 1 entrance: FV4=FV(0.08， 1， 0， FV3-TFY3), then spend TF Year 4
None remaining after that, meaning TFY4=FV4
We do backwards, FV4=15264.78=FV(0.08,1,0,FV3-TFY3), so FV3-TFY3=14134.05, so FV3=28671.94
likewise, we get the table:
PV(Trevor Year 1 study)=FV(Year 9)
so PV（0.08，9， 0， 50587.86）=25306.52
选D
网友评论