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# Working on Various Finance Problems

1. Janice would like to send her parents on a cruise for their 25th wedding anniversary. She has priced the cruise at \$15,000 and she has 5 years to accumulate this money. How much must Janice deposit annually in an account paying 10 percent interest in order to have enough money to send her parents on the cruise?

1. \$2,234
2. \$1,862
3. \$2,457
4. \$3,000

2. The future value of \$200 received today and deposited at 8 percent compounded semi-annually for three years is

1. \$253.
2. \$252.
3. \$380.
4. \$158.

3. Dan plans to fund his individual retirement account (IRA) with the maximum contribution of \$2,000 at the end of each year for the next 10 years. If Dan can earn 10 percent on his contributions, how much will he have at the end of the tenth year?

1. \$12,290
2. \$20,000
3. \$51,880
4. \$31,874

4. The future value of \$200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is ________.

1. \$158.00
2. \$253.00
3. \$134.66
4. \$252.00

5. The present value of \$100 received at the end of year 1, \$200 received at the end of year 2, and \$300 received at the end of year 3, assuming an opportunity cost of 13 percent, is

1. \$ 453.
2. \$1,181.
3. \$ 416.
4. \$ 500.

#### Solution Preview

Solution:

1. Using financial calculator:

N = 5, P/Y = 1, I/YR = 10, FV = 15000. CPT then press PMT.
Therefore, annual payment is \$2,456.96