Monday 15 October 2012

If you want to buy a $350,000 lathe to improve your shop, and you currently have $200K that you can invest at 8.5% compounded monthly, how long do you

TVM 2
















1. If you want to buy a $350,000 lathe to improve your shop, and you currently have $200K that you can invest at 8.5% compounded monthly, how long do you have to wait until you can afford the machine? (assume the 350K price remains the same)
















2. Let's say you want to buy a horse for $400K, and you invest $250K today for the next 5 years, compounding twice a year.  What annual interest rate do you need to find so that you can afford the machine. (Assume the price of the horse remains $400K)
















3. If you want to be a millionaire in 35 years and you can earn 12% compounded monthly, how much do you need to deposit at the end of each month?  How would your answer differ if the payments were at the beginning of the month? Refer to the first part of the problem, use Goal Seek to find the rate you'd have to find if you only wanted to pay $75 per month max.  
















4. Your 401k will match your retirement contribution of $225 (at the end of each month), and you can earn 9% compounded monthly for the next 25 years, how much will you have when you retire?  How much did you actually contribute, vs the gain?
















5. If you make monthly payments at the end of each month of $250 for the next 35 years and you can earn 10% compounded monthly, how much will you have when you retire?
















6. As per #5, How much can you withdraw each month if you will live another 40 years and can earn 7% compounded monthly.
















7. Your firm needs to pay off a $100,000 loan in 10 years. If the interest rate is 8%, compounded annually, what is the payment at the end of each year?
















8. If you are offered $200,000 in your hands today or $80,000 in your hands today and payments of $10,000 at then end of each quarter for the next 4 years.  Assume the money can be invested at 8% compounded quarterly, which would you choose?
















9. You are currently looking to buy a home.  You've found one you adore, but it's $440,000, and the bank expects 15% down.  Due to your past credit history, your loan rate will be 6.5%, paid monthly.  To keep the cost down, you decide on a 25 year payment plan.  Calculate your monthly payment on the dream home.  
















10.  Let's assume you don't have enough to make the size of payment #9 refers to, and instead you only have $1300 per month.  Use the Goal Seek function to calculate the maximum price of the house you can afford.









CLICK HERE TO GET THE ANSWER !!!!

No comments:

Post a Comment