Project #39161 - Answer five Basic Finance questions

 

  1. National Bank pays 3% simple interest on its savings account balances, whereas First City Bank pays 3% simple interest compounded annually. If you made a $165,000 deposit in each bank, how much more money would you earn from your First City Bank account at the end of 6 years?

  2. Assume you will need $500,000 when your child enters college in 17 years. You presently have $79,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?

  3. Why might maximizing revenue today not be best when trying to achieve the goal of financial management?

    4.You want to buy a $190,000 Porsche. If you believe your mutual fund can achieve a 7 percent annual rate of return and you want to buy the car in 9 years on the day you turn 30, how much must you invest today?

    5.The US government offered some securities for sale to the public on February 28, 2008. Under the terms of the deal, the government promised to repay the owner of one of these securities $1,000,000 on February, 2038, but investors would receive nothing until then. Investors paid the California government $443,000 for each of these securities.

    1. Based on the $443,000 price, what rate was the US government paying to borrow money?

    2. Suppose that, on February 28, 2019, the security’s price is $643,380. If an investor had purchased it for $443,000 at the offering and sold it on this day, what annual rate of return would she have earned?

    3. If an investor had purchased the security at market on February 28, 2019, and held it until it matured, what annual rate of return would she have earned? 

     

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Due By (Pacific Time) 09/04/2014 10:00 pm
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