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    Finance: Annuity Review Questions

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    What are the monthly mortgage payments on a 30-year loan for
    $150,000 at 12%?

    You have two assets in your portfolio: a stock mutual fund with a
    beta of 1.20 and U.S. Treasury securities (assume they are risk free).
    What is the beta for your portfolio if 40% of your funds are invested
    in the treasury securities?

    Find the beta of a portfolio of three stocks. One third of the portfolio
    is invested in each of the three stocks. The stocks and their betas
    are as follows: Mallmart - beta 1.10, Peak Power - beta 0.85 and
    MicroEase - beta 1.40

    What is an investment worth that promises to return $10,000 per
    year, given a required rate of return of 15%, if the benefits are
    expected for 10 years?

    What will a deposit of $4,500 at 12% compounded monthly be worth
    at the end of 10 years?

    How long does it take for $5,000 to grow into $6,742.44 at
    10% compounded quarterly?

    How much must you deposit at the end of each year in an account
    that pays a annual rate of 20 percent, if at the end of 5 years you
    want $10,000 in the account?

    What interest rate would you need to get to have an annuity of
    $7,500 per year accumulate to $279,600 in 15 years

    What would you pay for an annuity of $2,000 paid every six months
    for 12 years if you could invest your money elsewhere at 10%
    compounded semiannually?

    Thirty years ago Jesse Jones bought 10 acres of land for $1,000
    per acre in what is now downtown Houston. If this land grew in
    value at an 8 percent per annum rate, what is it worth today?

    A $10,000 car loan has payments of $361.52 per month for three
    years. What is the interest rate? Assume monthly compounding
    and give the answer in terms of an annual rate.

    Find the present value of $1,000 to be received at the end of 2 years
    at 12% compounded quarterly?

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    1)

    Periods = 360 (30 years times 12 months)
    Monthly Interest Rate = 12% divided by 12 months = 1%

    C = $1,542.92

    2 & 3)

    To calculate the Beta of a portfolio:

    (security A × Weight )+ (securityB × weight)

    4)

    5)

    t = ...

    Solution Summary

    The solution includes a word and an excel sheet that show in steps how to calculate the payments on a loan, the beta of a portfolio, present and future values of investments

    $2.19

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