1) Luke wants to have \$4,250 four years from now to put towards an...

Question

# 1) Luke wants to have \$4,250 four years from now to put towards an...

1) Luke wants to have \$4,250 four years from now to put towards an education. He has an investment account that earns 8.5% per year. How much would he have to deposit today in order to reach his goal?

2) Harry just inherited some commercial land he wants to sell. Buyer 1 is offering \$1,000,000, but wants Harry to keep the land for 7 years before they can pay him for the land. Buyer 2 is offering \$460,000 to buy the land today. Based on a 12% discount rate, what is the present value of Buyer 1's offer? Which offer should Daniel take?

3) Jackson has an account with a FV of \$1,000,000 38 years from now. How much is it worth today (PV) based on a rate of 10% that has MONTHLY compounding?

4) Sam just won some valuable sculptures in a contest. He wants to sell them and has received two comparable offers. Buyer 1 is offering \$50,000, but wants Sam to keep the sculptures for 3 years before the buyer can pay him for them. Buyer 2 is offering \$35,000 to buy the sculptures today. If Sam takes Buyer 2's offer, he can invest the money in an account that earns 9.5%, compounding monthly. Based on this 9.5% compounding discount rate, what is the present value of Buyer 1's offer? Which offer should Daniel take?

5) Jared has a certificate of deposit that will be worth \$9,000 at maturity. The market rate for CD's like this is 12% with monthly compounding. If the CD is meant to mature 20 years after purchase, what was the price Jared paid for the CD?

6)  Peter will receive a trust fund payment 8 years from now totaling \$45,000. Based on a discount rate of 10.5%, how much is the trust fund payment worth in today's dollars?

7) Charlie just found out his old beanie baby bear is worth \$42,000. He's had the bear for 15 years. If this bear's value grew at a rate of 85%, how much did Charlie pay for the bear, originally?

8) Jason just found a mutual fund that promises an 11.5% rate of return. He wants to use it to develop a college fund for his kids. If he wants to have \$40,000, 18 years from now, how much money will Jason need to deposit today in the account?

9) Tammy has an heirloom that she's sure she can sell for \$18,500 if she holds onto it for 16 years. She has a mutual fund that earns 12% interest, compounding monthly. Tammy was just offered \$3,000 for this antique today. What is the PV of the heirloom? Should she sell it today?

Josie has an antique artifact that she's sure she can sell for \$15,000 if she holds onto it for 13 years. She has a special savings account that earns 6.5% interest, compounding quarterly. Josie was just offered \$6,500 for this antique today. What is the PV of the antique? Should she sell it today?

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