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Assignment 1 8/10 points (80.00%)

Quiz, 10 questions

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1.
$100 today is worth the SAME as $100 tomorrow.

True

False

Correct 
Correct.

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2.
At an interest rate of 13% it is better to have $200 today than $250 in 3
years.

True

Correct 
Correct.

False

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points

Assignment3.1 8/10 points (80.00%)

Shawn wants to buy a new telescope. He estimates that it will take him one
Quiz, 10 questions
year to save the money and that the telescope will cost $200. At an interest
rate of 6%, how much does Shawn need to set aside today to purchase the
telescope in one year? (Enter just the number in dollars without the $ sign or
a comma and round o decimals to the closest integer, i.e., rounding $30.49
down to $30 and rounding $30.50 up to $31.)

189

Correct Response 
Correct.

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4.
Je has $1,200 that he invests in a safe nancial instrument expected to
return 4% annually. Marge has $600 and invests in a more risky venture that
is expected to return 8% annually. Who has more after 27 years? And how
much does he/she have in FV terms?

Je ; $56,501.06

Je ; $3,460.04

Marge; $52,410.46

Marge; $4,792.84

Correct 
Correct.

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5.

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Don has just received a cash gift of $65,000 from his rich eccentric uncle. He
wants to set it aside to pay for his daughter Cynthia's college education.
AssignmentCynthia 1 will begin college in 13 years and Don's nancial advisor says that 8/10 points (80.00%)
she can earn 8% interest on an investment in a special college fund. How
Quiz, 10 questions
much will Don have in the fund when Cynthia begins college? (Enter just the
number in dollars without the $ sign or a comma and round o decimals to
the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50
up to $31.)

176776

Correct Response 
Correct.

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6.
Bridgette's grandparents opened a savings account for her and placed $700
in the account. The account pays 3.5% interest. Bridgette wants to be a
singer and she has her heart set on a new karaoke machine. The machine
costs $200. How much less will the account be worth in 8 years if she buys
the karaoke machine now versus leaving the account untouched? (Enter just
the number in dollars without the $ sign or a comma and round o decimals
to the closest integer, i.e., rounding $30.49 down to $30 and rounding
$30.50 up to $31.)

658

Incorrect Response 
Di erence in Future Values or future value of a di erence?

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7.

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Joe is getting ready to buy a car. He has $18,000 in investments earning 5.6%
annually. The car also costs $18,000. If he doesn't pay cash for the car, Joe
Assignmentcan 1 get a loan at 2.7% interest for 6 years. The loan is structured so that Joe8/10 points (80.00%)
pays one balloon payment at the end of 6 years. The balloon payment
Quiz, 10 questions
includes the principal plus all interest accrued over 6 years. If Joe takes the
loan will he have enough money available from his investments to make the
balloon payment? How much will he be short/have to spare?

Yes; $3,840.60

Correct 
Correct.

Yes; $3,368.04

No; $3,368.04

No; $3,840.60

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8.
Ralph knows that he is going to have to replace his roof soon. If he has the
roof replaced now, it will cost $10,000. He could wait 5 years, but it will then
cost him $20,000. At what rate will these options cost the same? This is also
known as the break-even point. (Allow two decimals in the percentage but
do not enter the % sign.)

14.87

Correct Response 
Correct.

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9.
Jessica is in the market for a new car. She has narrowed her search down to
Assignment21models. Model A costs $28,000 and Model B costs $17,000. With both cars
8/10 points (80.00%)
Quiz, 10 questions she plans to pay cash and own them for 4 years before trading in for a new
car. Her research indicates that the trade in value for Model A after 4 years
is 59% of the initial purchase price, while the trade in value for Model B is
31%. Jessica has no emotional attachment to either model and wants to
make a strictly nancial decision. The interest rate is 4%. For simplicity
assume that operating and maintenance costs for the models are identical
every year. Which model is the better decision and how much "cheaper" is it
than the alternative?

Model A; $1,383.45

Model A; $11,000.00

Model B; $1,383.45

Correct 
Correct.

Model B; $11,000.00

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10.
College tuition has been rising at a rate of 6% per year. Currently the
average tuition of a state college is $9,500 per year. Andrea's son Trevor will
begin college in 13 years. Andrea's portfolio is making 3% annually. How
much does Andrea need to have set aside today/now to pay for 4 years of
college for Trevor? (Note: Tuition will continue to change annually and
Andrea's portfolio balance will continue to accrue interest while Trevor is in
school. Also, tuition is due at the beginning of each year.)

$57,109.38

$57,650.44

$38,000.00

$55,971.30

This should not be selected 

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You applied the wrong number of years when calculating the

growing annuity. Don't forget that tuition is due at the beginning of
Assignment 1 each year. 8/10 points (80.00%)
Quiz, 10 questions

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