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#1. Joe spends \$12 a week on coffee or \$624 a year, what would be the future value of that amount over 10 years if the funds were deposited in an account earning 3 percent?

#2. An ATM with a service fee of \$2.50 is used by a person 50 times in a year for a total of \$125 per year. What would be the future value in 10 years (use a 3 percent rate) of the annual amount paid in ATM fees?

#3. Charles deposits \$4,000 a year into her retirement account. If these funds have an average earning of 7 percent over the 40 years until her retirement, what will be the value of her retirement account?

#4. Mr Big Bucks says he will pay you \$60,000 now for annual payments of \$10,000 that you are expected to receive for a legal settlement over the next 10 years.  What is the present value of this assuming the time value of the money at 8%?

#5. Susan plans to reduce her saving (that is, she will spend more) by \$70 a month. What would be the foregone future value of this reduced saving over the next 10 years? (Assume monthly cash flows, and an annual interest rate of 4 percent.)

• 6 years ago
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