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# BUSN 602 – How many years will it take \$2 million

Question
1-) How many years will it take \$2 million to grow to \$6.80 million with an annual interest rate of 7 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Period years

2-) What is the value in year 15 of a \$310 cash flow made in year 9 if interest rates are 11 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Value in year 15 \$

3-) What would be more valuable, receiving \$700 today or receiving \$850 in three years if interest rates are 8 percent? Which one a or b?

a) Receiving \$700 today

b) Receiving \$850 in future

4-) Consider a \$5,900 deposit earning 10 percent interest per year for 10 years.

What is the future value? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value \$

How much total interest is earned on the original deposit? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Total interest earned \$

How much is interest earned on interest? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Interest earned on the interest \$

5-) What is the value in year 4 of a \$2,000 cash flow made in year 6 if interest rates are 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Value in year 4 \$

6-) A perpetuity pays \$160 per year and interest rates are 8.1 percent. How much would its value change if interest rates increased to 9.6 percent? (Round your answer to 2 decimal places.)

Change in value \$

Did the value increase or decrease?

Increase

Decrease

7-)

You are looking to buy a car. You can afford \$630 in monthly payments for five years. In addition to the loan, you can make a \$730 down payment. If interest rates are 8.50 percent APR, what price of car can you afford? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Present value \$

8-)Assume that you contribute \$260 per month to a retirement plan for 20 years. Then you are able to increase the contribution to \$520 per month for another 30 years. Given a 7 percent interest rate, what is the value of your retirement plan after the 50 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value of multiple annuities \$

9-) 5-What annual interest rate would you need to earn if you wanted a \$1,000 per month contribution to grow to \$82,500 in six years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annual interest rate %

10-) Payday loans are very short-term loans that charge very high interest rates. You can borrow \$500 today and repay \$615 in two weeks. What is the compounded annual rate implied by this 23 percent rate charged for only two weeks? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Compounded annual rate %]

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