Match the type of problem to the individual situations given below. If there is
ID: 2474747 • Letter: M
Question
Match the type of problem to the individual situations given below. If there is more than one way to solve a problem, pick the approach that is the shortest or most efficient. The type of problems are listed next:
Future value of 1
Present value of 1
Future value of an annuity (ordinary or due)
Present value of an annuity (ordinary or due)
E. Present value of 1 and present value of an annuity
Joe Smith wins the lottery. He can either receive $100,000 a year from today or for the next five years, a payment each year of $30,000. (assume 5% interest)
Alice Jones is saving to go on a trip in three years. She sets aside $25 a month. If she can earn 4% a year, how much will she have in three years?
What is the cash proceeds from a $100,000 ten-year bond issued with a stated interest rate of 8% when the effective interest rate (market rate) is 6%?
Jones needs $20,000 at retirement in 20 years. If she can earn an average of 6% per year, how much does she need to deposit each year?
Fred invested in a 7%, three year CD. If he put $18,000 in the CD, how much $ will he have in three years?
John wants to rent his car to a friend. If the car is currently worth $8,000 and will last 6 more years, how much should he charge his friend (interest rate is 5%).?
Jill wants to buy a house. The home is selling for $200,000. The fixed rate is 7% and she would like to spread the payments over 30 years. Calculate the monthly payment amount.
Bob owes Richard money. Richard has offered to accept $200 now or $300 one year from now. Assume the interest rate is 3%.
Alisa needs $6,000 to go to college full-time in 5 years. If the best interest rate is 6%, how much would she need to deposit now to build up to $6,000 in five years?
George is saving for a trip out west. If he can earn 5% and he needs $2,000 in 8 years, how much does he need to deposit each year?
A.Future value of 1
B.Present value of 1
C.Future value of an annuity (ordinary or due)
D.Present value of an annuity (ordinary or due)
E. Present value of 1 and present value of an annuity
-A.B.C.D.E.Joe Smith wins the lottery. He can either receive $100,000 a year from today or for the next five years, a payment each year of $30,000. (assume 5% interest)
-A.B.C.D.E.Alice Jones is saving to go on a trip in three years. She sets aside $25 a month. If she can earn 4% a year, how much will she have in three years?
-A.B.C.D.E.What is the cash proceeds from a $100,000 ten-year bond issued with a stated interest rate of 8% when the effective interest rate (market rate) is 6%?
-A.B.C.D.E.Jones needs $20,000 at retirement in 20 years. If she can earn an average of 6% per year, how much does she need to deposit each year?
-A.B.C.D.E.Fred invested in a 7%, three year CD. If he put $18,000 in the CD, how much $ will he have in three years?
-A.B.C.D.E.John wants to rent his car to a friend. If the car is currently worth $8,000 and will last 6 more years, how much should he charge his friend (interest rate is 5%).?
-A.B.C.D.E.Jill wants to buy a house. The home is selling for $200,000. The fixed rate is 7% and she would like to spread the payments over 30 years. Calculate the monthly payment amount.
-A.B.C.D.E.Bob owes Richard money. Richard has offered to accept $200 now or $300 one year from now. Assume the interest rate is 3%.
-A.B.C.D.E.Alisa needs $6,000 to go to college full-time in 5 years. If the best interest rate is 6%, how much would she need to deposit now to build up to $6,000 in five years?
-A.B.C.D.E.George is saving for a trip out west. If he can earn 5% and he needs $2,000 in 8 years, how much does he need to deposit each year?
Explanation / Answer
1. D
2. C
3. E
4. C
5. A
6. D
7. D
8. B
9. A
10. C