FIN-210 Topic 2 Chapter 3 Financial Planning Problems
Chapter 3 Financial Planning Problems
Complete Problems 1, 2, 5, 6, 8, 11, and 14 in Chapter 3 of the textbook.
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1 Future Value. Kyle has $1,000 in cash received for high school graduation gifts from various relatives. He wants to invest it in a certificate of deposit (CD) so that he will have a down payment on a car when he graduates from college in five years. His bank will pay 6% for the five-year CD. How much will Kyle have in five years to put down on his car?
2 Future Value. Sandra wants to deposit $100 each year for her son. If she places it in a savings account that pays 5%, what amount will be in the account in 20 years?
5 Present Value. Cheryl wants to have $2,000 in spending money to take on a trip to Disney World in three years. How much must she deposit now in a savings account that pays 5% to have the money she needs in three years?
6 Present Value. Juan would like to give his newly born grandson a gift of $10,000 on his 18th birthday. Juan can earn 7% interest on a certificate of deposit. How much must he deposit now in order to achieve his goal?
8 Future Value of Annuity. Michelle is attending college and has a part-time job. Once she finishes college, Michelle would like to relocate to a metropolitan area. She wants to build her savings so that she will have a “nest egg” to start her off. Michelle works out her budget and decides she can afford to set aside $50 per month for savings. Her bank will pay her 3% on her savings account. What will Michelle’s balance be in five years?
11 Future Value of Annuity. Lena has just become eligible to participate in her company’s retirement plan. Her company does not match contributions, but the plan does average an annual return of 12%. Lena is 40 and plans to work to age 65. If she contributes $200 per month, how much will she have in her plan at retirement?
14 Future Value of Annuity. Jen spends $10 per week on lottery tickets. If she takes the same amount that she spends on lottery tickets and invests it each week for the next five years at 10%, how much will she have in five years?
Course: FIN-210 Personal Finance
School: Grand Canyon University
- 06/05/2021
- 35
