Time Value of Money Assignment | Homework For You
8. With respect to the time value of money, the future value of a given dollar amount has what kind of relationship to the rate of interest used in computing the future value? A) no relationship B) logarithmic C) a positive relationship D) a negative relationship
16. The time value of money is primarily about inflation. A) True B) False
18. Betty White is ready to retire and would like to buy an annuity that would guarantee her afixed income. The annuities are as follows:
Annuity: Cost of Annuity: Annual Annuity Payment: Duration of Annuity(years)
A $50,000 $8,500 12
B $60,000 $7,000 25
C $70,000 $8,000 20
Question: Alternatively, Betty could earn 11 percent on her money by placing it in a savings account. What should she do with her money? A) Purchase Annuity A B) Purchase Annuity B C) Purchase Annuity C D) Place her money in a savings account
Use the following to answer questions 20-21. Montgomery Burns, age 60, wants to retire at age 80 in order to steal candy from babies full time. Once Mr. Burns retires, he wants to withdraw $1 million at the beginning of each year for 10 years from a special offshore account that will pay 20 percent annually. In order to fund his retirement, Mr. Burns will make 20 equal deposits in this special account.
20. How much money will Mr. Burns need at age 80? A) $4,192,472.09 B) $5,030,966.50 C) $6,191,736.42 D) $31,150,418.53
21. How much will Mr. Burns need to deposit each year, at the end of the year, in order to fund his retirement? A) $22,457.11 B) $26,948.53 C) $33,166.23 D) $251,548.33 Get Finance homework help today
