## Description

To complete your last year in business school and then go through law school, you will need $35,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $35,000 one year from today). Your rich uncle offers to put you through school, and he will deposit in a bank paying 8% interest a sum of money that is sufficient to provide the 4 payments of $35,000 each. His deposit will be made today.

How large must the deposit be? Round your answer to the nearest cent.

How much will be in the account immediately after you make the first withdrawal? Round your answer to the nearest cent.

How much will be in the account immediately after you make the last withdrawal? Round your answer to the nearest cent.

Find the present value of the following ordinary annuities. Round your answers to the nearest cent. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can “override” the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to “BEG,” press FV, and find the FV of the annuity due.)

$800 per year for 10 years at 8%.

$400 per year for 5 years at 4%.

$800 per year for 5 years at 0%.

Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.

$800 per year for 10 years at 8%.

$400 per year for 5 years at 4%.

$800 per year for 5 years at 0%.

Your company is planning to borrow $1,500,000 on a 5-year, 12%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.

It is now January 1. You plan to make a total of 5 deposits of $600 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 8% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. How much will be in your account after 10 years? Round your answer to the nearest cent.

You must make a payment of $1,768.65 in 10 years. To get the money for this payment, you will make 5 equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 8% with quarterly compounding. How large must each of the 5 payments be? Round your answer to the nearest cent.

What’s the future value of a 6%, 7-year ordinary annuity that pays $350 each year? Round your answer to the nearest cent.

If this were an annuity due, what would its future value be? Round your answer to the nearest cent.

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