Your birthday is coming up and instead of other presents

Your birthday is coming up and instead of other presents

Subject: Business    / Finance   
Question

5.6Your birthday is coming up and instead of other presents, your parents promised to give you $1,000 in cash. Since you have a part-time job and, thus, don’t need the cash immediately, you decide to invest the money in a bank CD that pays 5.2 percent quarterly for the next two years. How much money can you expect to earn in this period of time?

5.12 Present value: Tracy Chapman is saving to buy a house in fi ve years. She plans to put 20 percent down at that time, and she believes that she will need $35,000 for the down payment. If Tracy can invest in a fund that pays 9.25 percent annually, how much will she need to invest today?

5.22Multiple compounding periods: Samantha plans to invest some money so that she has $5,500 at the end of three years. Which investment should she make given the following choices: a. 4.2 percent compounded daily. b. 4.9 percent compounded monthly. c. 5.2 percent compounded quarterly. d. 5.4 percent compounded annually.

5.24

Time to grow: You are able to deposit $850 in a bank CD today, and you will withdraw the money only once the balance is $1,000. If the bank pays 5 percent interest, how long will it take for the balance to reach $1,000?

5.28 Growth rate: Infosys Technologies, Inc., an Indian technology company, reported net income of $419 million this year. Analysts expect the company’s earnings to be $1.468 billion in fi ve years. What is the expected growth rate in the company’s earnings?