1. Suppose 20 years ago your mother deposited $ 2500 in an account earning 12% a

ANSWER 1 ANSWER 2 2500*(1+12%)^10=7764.21 7764.21-1000=6764.21 6764.621*(1+12%)^10=21009.88 ANSWER 3 ANSWER 4 2500*(1+12%)^20 24115.73

ID: 2384068 • Letter: 1

Question

1. Suppose 20 years ago your mother deposited $ 2500 in an account earning 12% annually. Obtain today's value.

a. 24,115.73

b.24,116.73

c.24,117.73

d.24,118.73

e. None of the above

2. Suppose 20 years ago your mother deposited $ 2500 in an account earning 12%. After 10 years she withdrew $ 1,000. Obtain todays value.

a. 21,007.88

b.21,008.88

c.21,009.88

d.21,010.88

e. None of the above

3. What is the present value of a consol, assuming it offers $ 20 at the end of every year for ever and k = 8%?

a. 20

b. 160

c. 250

d. 400

e. None of the above

4. Suppose you need $ 20,000 to buy a new car in 5 years. Assume that you use an account earning 10%. What do you have to deposit today?

a. 12,414. 43

b. 12,416.43

c. 12,418.43

d. 12,420.43

e. None of the above

ANSWER 1

ANSWER 2

2500*(1+12%)^10=7764.21

7764.21-1000=6764.21

6764.621*(1+12%)^10=21009.88

ANSWER 3

ANSWER 4

2500*(1+12%)^20 24115.73

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