1. How much money would be in a savings count that started with a deposit of $2,000 in year 1 with each succeeding amount increasing by 10% per year? Use an interest rate of 15% per year and a 7-year period.
2. You are a college student making yearly payment for your loan starting from now. For the first three years, you pay $2,500 a year. Year 4 to 6, your parents help you with the payment so you pay $1,500 per year, and finally year 7 you pay $2,500. Determine the value in year 8 that is equivalent to the cash flow stated above. Use an interest rate of 12%.
3. Calculate the present worth in year 0 of the following series of disbursements. Assume that i= 10% per year.
|
Year
|
Disbursements, $
|
|
|
Disbursements, $
|
|
0
|
0
|
|
6
|
5,000
|
|
1
|
3,500
|
|
7
|
5,000
|
|
2
|
3,500
|
|
8
|
5,000
|
|
3
|
3,500
|
|
9
|
5,000
|
|
4
|
5,000
|
|
10
|
5,000
|
|
5
|
5,000
|
|
|
|