1)It is now January 1. You plan to make a total of 5 deposits of $400 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
2)You must make a payment of $1244.72 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 10% with quarterly compounding. How large must each of the 5 payments be?
3)Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm and her boss is selling securities that
call for 4 payments of $50 (1 payment at the end of each of the next 4 years) plus an extra payment of $1000 at the end of Year 4. Your friend says she can
get you some of these securities at a cost of $875 each. Your money is now invested in a bank that pays an 8% nominal (quoted) interest rate but with quarterly
compounding. You regard the securities as being just as safe and as liquid as your bank deposit so your required effective annual rate of return on the
securities is the same as that on your bank deposit. You must calculate the value of the securities to decide whether they are a good investment. What is their
present value to you? Round answer to nearest cent.
4)An investment will pay $200 at the end of each of the next 3 years $400 at the end of Year 4 $500 at the end of Year 5 and $700 at the end of Year 6. If
other investments of equal risk earn 10% annually what is its present value? what isits future value?