1. You have $60,979.58 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $290,000. You expect to earn 11% annually on the account. How many years will it take to reach your goal? Round your answer to two decimal places at the end of the calculations.
2. Bank USA recently purchased $10 million worth of euro- denominated one-year CDs that pay 10 percent interest annually. The current spot rate of U.S. dollars for euros is $1.30/€1. (LG 9-5)
a. Is Bank USA exposed to an appreciation or depreciation of the dollar relative to the euro?
b. What will be the return on the one-year CD if the dollar appreciates relative to the euro such that the spot rate of U.S. dollars for euros at the end of the year is $1.20/€1?
c. What will be the return on the one-year CD if the dollar depreciates relative to the euro such that the spot rate of U.S. dollars for euros at the end of the year is $1.40/€1?