1. You are considering buying a new, $15,000 car, and you have $2,000 to put toward a down payment. If you can negotiate a nominal annual interest rate of 10% and finance the car over 60 months, what are your monthly car payments?
2. You are saving money so that you can purchase a house in five years. You plan to contribute six payments of $3,000 a year. The first payment will be made at the end of the month and the final payment will be made five years from now. If you earn 11% in your investment account, how much money will you have in the account five years from now?
3. What would the future value of $100 be after 5 years at 10% compound interest?
4. You own an oil well that will pay you $25,000 per year for 8 years, with the first payment being made today. If you think a fair return on the well is 7%, how much should you ask if you decide to sell it?
5. How much would $10,000 due in 100 years be worth today if the discount rate were 10%?
Please find the solutions attached.
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The compounded interest and discount rates are examined. The future values of stocks are determined.