Evening MBA Finance Chap5 Problems • 6.Calculating Interest Rates Assume the total cost of a college education will be $280,000 when your child enters college in 18 years. You presently have $50,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? • 7.Calculating the Number of Periods At 9 percent interest, how long does it take to double your money? To quadruple it? • 8.Calculating Interest Rates In 2005, the average vehicle selling price in the United States was $27,958. Seven years earlier, the average price was $21,608. What was the annual increase in vehicle selling price?
Evening MBA Finance Chap5 Problems • 12.Calculating Future Values Your coin collection contains fifty 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2054, assuming they appreciate at a 4.5 percent annual rate? • 13.Calculating Interest Rates and Future Values In 1895, the first U.S. Open Golf Championship was held. The winner's prize money was $150. In 2006, the winner's check was $1,170,000. What was the percentage increase in the winner's check over this period? If the winner's prize increases at the same rate, what will it be in 2040? • 14.Calculating Present Values The first comic book featuring Superman was sold in 1938. In 2005, the estimated price for this comic book in good condition was about $485,000. This represented a return of 25.90 percent per year. For this to be true, what must the comic book have sold for when new?
Evening MBA Finance Chap5 Problems • 19.Calculating Future Values You are scheduled to receive $25,000 in two years. When you receive it, you will invest it for six more years at 7.9 percent per year. How much will you have in eight years? • 20.Calculating the Number of Periods You expect to receive $10,000 at graduation in two years. You plan on investing it at 11 percent until you have $100,000. How long will you wait from now?