The Value of $100 Today Is Worth the Same Tomorrow Essay Sample free essay sample

( 5 points ) $ 100 today is worth the SAME as $ 100 tomorrow. True False Question 2 ( 5 points ) At an involvement rate of 10 % it is better to hold $ 100 today than $ 120 in 2 old ages. True False Question 3 ( 5 points ) Megan wants to purchase a interior decorator pocketbook and programs to gain the money baby sitting. Suppose the involvement rate is 6 % and she is willing to wait one twelvemonth to buy the bag. How much baby sitting money ( to the nearest whole dollar ) will she necessitate to gain today to purchase the bag for $ 400 one twelvemonth from now? ( Enter merely the figure without the $ mark or a comma ) Answer for Question 3 25. 44 Question 4 ( 10 points ) Johnny and Darren both earn $ 100 working on their several neighbors’ large farms. Johnny puts his $ 100 in the hoggish bank that his parents gave him to promote him to salvage. Darren puts his money in a nest eggs account his parents put up for him. The nest eggs account pays 3 % involvement. We will write a custom essay sample on The Value of 0 Today Is Worth the Same Tomorrow Essay Sample or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page They both take their money out after 5 old ages. How much more money does Darren hold than Johnny? 16 19 10 3 Question 5 ( 10 points ) Don has merely received a hard currency gift of $ 50. 000 from his rich bizarre uncle. He wants to put it aside to pay for his girl Cynthia’s college instruction. Cynthia will get down college in 10 old ages and Don’s fiscal adviser says that she can gain 7 % involvement on an investing in a particular college fund. How much will Don hold in the fund when Cynthia begins college? ( Enter merely the figure without the $ mark or a comma ; unit of ammunition to the nearest whole dollar. ) Answer for Question 5 98357. 2 Question 6 ( 10 points ) Bridgette’s grandparents opened a nest eggs history for her and placed $ 500 in the history. The history pays 3. 5 % involvement. Bridgette wants to be a vocalist and she has her bosom set on a new karaoke machine. The machine costs $ 150. How much less will the history be deserving in 8 old ages if she buys the karaoke machine now versus go forthing the history untouched? ( Enter merely the figure without the $ mark or a comma ; unit of ammunition to the nearest whole dollar. ) Answer for Question 6 5516. 20-3861. 34=1655 Question 7 ( 10 points ) The Johnson household is worried about their ability to pay college tuition for their girl Chloe. Tuition rates are presently $ 9. 500 per twelvemonth at the province college and have been increasing at a rate of 7 % yearly. Chloe will get down college in 7 old ages. The Johnson’s have $ 9. 500 set aside now in a college program that will gain 6 % per twelvemonth. They late heard about a program to pre-pay tuition at current rates. that is pay $ 9. 500 per twelvemonth of college. Should they pre-pay Chloe’s first twelvemonth now or maintain the money invested and pay the tuition 7 old ages from now? How much are they salvaging in FV footings with this determination? Pre-pay ; 685 Pre-pay ; 781 Pre-pay ; 970 Don’t Pre-pay ; 781 Don’t Pre-pay ; 685 Don’t Pre-pay ; 970 Question 8 ( 15 points ) Ralph knows that he is traveling to hold to replace his roof shortly. If he has the roof replaced now. it will be $ 10. 000. He could wait 5 old ages. but it will so be him $ 20. 000. At what rate will these options cost the same. ( Hint: This is besides known as the break-even point. Exact computation up to two decimals is non hard. If stuck. test and mistake will assist. ( No more than two decimals in the per centum involvement rate but do non come in the % sign. ) Answer for Question 8 Question 9 ( 15 points ) Rondo is in the market for a new auto. He has narrowed his hunt down to 2 theoretical accounts. Model A costs $ 32. 000 and Model B costs $ 28. 000. With both autos he plans to pay hard currency and have them for 4 old ages before trading in for a new auto. His research indicates that the trade in value for Model A after 4 old ages is 60 % of the initial purchase monetary value. while the trade in value for Model B is 45 % . The involvement rate is 5 % . For simpleness assume that operating and care costs for the theoretical accounts are indistinguishable. Which theoretical account is the better determination and how much â€Å"cheaper† is it than the option? Model A ; 1430 Model B ; 1430 Model A ; 4000 Model A ; 1257 Model B ; 1207 Model B ; 4000 Question 10 ( 15 points ) Christine is a new homebuyer. She wants to do certain that she incorporates the cost of care into her determination. She estimates that everyday fixs and care on the place she is sing will be $ 1. 590 in the first twelvemonth ( one twelvemonth from now ) . Due to the increasing age of the place. she expects that care costs will increase 6 % yearly. The involvement rate is 5 % . If she plans to be in the place for 10 old ages. what is the present value of all future care? ( Note that care costs will alter yearly. and starts one twelvemonth from now and she plans to make the last one before selling her house. )