Busn380 - Week 1 Problem Set 1

Week 1: Problem Set 1 1.Ben collins plans to pervert a house for $65,000. If that real estate home is expect to attach in value 5 per centum individually form, what would its approximate value be seven age from right away? dissolvent: PV * FVF or, PV (1 + .05)^n or, PV (1.05)^7 or, PV * 1.4071 or, $65,000 * 1.4071 = $91,461.50 2. At an yearbook worry rate of five percent, how long would it stupefy for your savings to doubled? Answer: Future Value component = (1 + i)^n or, FVF = (1 + .05)^14.21 or, FVF = 2.000322: Where $1,000 * 2.000322 = $2,000.3221 or, move to the nearest whole dollar it would relieve oneself 14.21 years with a 5% APR to double ones savings. 3.In the mid-1990s, selected automobiles had an average cost of $12,000. The average cost of those same go vehicles is instanter $20,000. What was the rate of summation for this item between the two measure closures? Answer: Using an increment of 15 years; PV * FVF or, PV (1 + i)^n or, PV (1.0347) ^15 or, $12,000 * 1.6681 = $20,017.20; Alternatively, PV (1.0346)^15 or, $12,000 * 1.6657 = $19,988.40; So, we piece of ass see the rate of increase was between 3.46% and 3.47% each year for 15 years. 4.A family spends $28,000 a year for living expenses. If prices increase by 4 percent a year for the next three years, what amount provide the family requisite for its living expenses? Answer: PV (1 + i)^n or, PV (1 + .

04)^3 or, $28,000 * 1.125 = $31,500 require for the familys annual living expenses. 5.What would be the per annum gelt for a person with $6,000 in savings at an annual sideline rate of 5.5 percent? Answer: PV (1 + i)^n - PV or, $6,000 * 1.055 - $6,000 = $330 in yearl y earnings. 6.Elaine Romberg pr! epares her own income revenue enhancement extend each year. A tax preparer would charge her $60 for this service. Over a period of 10 years, how much does Elaine gain from preparing her own tax return? Assumes she can earn 3 percent on her savings. Answer: Elaine Romberg gains $708.47 everywhere a ten year period (See dodge Below). YearContribution...If you motivation to get a full essay, revisal it on our website: OrderEssay.net

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