1. You are planning to invest $1,300 in a bank certificate of deposit (CD) for five years. The CD will pay interest of 8 percent. What is the future value of your investment?
2. There are two bonds and you have $5,000 of seed money for your investment. Fidelity bond will mature in 20 years later at repayment of $16,000. MetLife bond will mature in 17 years later at repayment of $14,000. Until then there is no interest for both bonds.
a) Calculate the yearly rate of return for both bonds.
b) Which of bonds is more attractive? Why?
3. You will need to borrow $150,000 as start-up funds for a business you’ve been planning. The loan arrangement will be done so that you will be making 36 equal payments with 8% interest rate. What is your payment?
4. You expect to need $20,000 as a down payment on an automobile in three years. How much do you need to invest today in an account paying 6.5 percent?
5. You are trying to buy the new iPhone X ($1,000) on a loan derive the required monthly payments (for both fixed payment plan and fixed principal) on a 24 month payment plan with 5% monthly interest.