Question

Please help by providing explanation/step by step processes for solutions. Thank you!

1. A young adult expects to receive a cash gift of $9,402 from his trust fund in 9 years.

At an interest rate of 10% compounded annually, the present value of the gift is closest to: _______

2. You expect to buy a house in 9 years. At that time, you will need a down payment of $45,524. A local bank offers a savings account that pays 5% per year, compounded monthly.

The amount you would need to deposit today in order to have the $45,524 in 9 years is closest to: _______

3. An annuity investment will pay you $48,513 per year for the next 15 years with the first payment coming one year from today.

At a rate of 5%, compounded annually, the present value of the annuity is closest to: _______

4. You receive a graduation gift of $13,568 and decide to invest the money. You invest the money in shares of Facebook.

Assuming that Facebook generates an 11% return per year, the value of the investment at the end of 16 years will be closest to: ______

Answer 1

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PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins Formulas Data - 2x 11 A = = = V General A A Wrap Text Merce Merge & Center Center, Σ AutoSum : A Fill 2 Sort & m Find & E E E .0 .00 8. Insert Delete Format $ - % $ % Number Conditional Format Formatting as Table Styles Cell Styles 2 Clear Filter Editing Select Alignment Cells File Home Insert Page Layout % Cut Calibri Ea Copy Paste Format Painter B I U - D Clipboard Font KH61 fax KB 47 48 49 50 51 KC K D KE KE KG KH KI K KK KL KM FUTURE VALUE = GIFT YEARS 9402 FV 9n 10% r RATE 52 PRESENT VALUE = PRESENT VALUE = 53 FV/(1+r)^n 9402/(1+0.10)19 3987.37 54 ANS PRESENT VALUE = 55 56 45524 FV 57 58 59 60 2. FUTURE VALUE = DOWN PAYMENT YEARS RATE NO OF MONTHS MONTHLY RATE 5% 108 n 0.4166667% r 61 62 63 64 65 PRESENT VALUE = PRESENT VALUE = PRESENT VALUE = FV/(1+r)^n 45524/(1+0.004166667)^108 29054.53 ANS W N CAP STRU VALUE profit margin loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPONPER APR CPI ear FVA pva 52 BO LOAN OPTIONSpv, fv, annuity ferences 53 130% 0 0 Rea 1 - _ + ELEB * * OENG 30-10-2019

PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins File Home Insert Page Layout Formulas Data - 2x % Cut Insert Delete Format Σ AutoSum : A Fill Sort & 2 Clear Filter Editing Find & Select Cells KI KD K K KL KM Calibri 11 A A = = = V Wrap Text General E Copy Paste BIU D - A E F Format Painter Merge & Center $ % 48.08 Conditional Format Cell Formatting as Table Styles Clipboard Font Alignment Number Styles KB67 f КВкс KC KD KE KE KG KH 65 66 3 PMT 48513 67 YEARS 15 n 68 RATE 5% r 69 70 PVA = PMT*(1/r)*(1-(1/(1+r)^n)) 71 PVA = 48513*(1/0.05)*(1-(1/(1+0.05)^15)) 72 ANS PVA = 503548.35 73 74 4 PRESENT VALUE = GIFT 13568 PV 75 YEARS 16 n 76 RATE 11% r 77 78 79 80 81 FUTURE VALUE = FUTURE VALUE = PRESENT VALUE = PV*(1+r)^n 13568*(1+0.11)^16 72058.21 ANS 82 83 H N CAP STRU VALUE profit margin loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPONPER APR CPI ear FVA 0 LOAN OPTIONSpv, fv, annuity ferences pva 52 BO. 53 130% 0 -+ Rea 1 - 6. B 9 . * * OENG 30-10-2019