ASSIGNMENT #3

1)
You start to save for a major purchase. You can invest $500 every three months for 10 years. You are able to earn 8% compounded semi-annually. What is the amount of interest that you earn during the entire term?
1)
_______ A)
$30072.94
B)
$25072.94
C)
$10072.94
D)
$15072.94
E)
$20072.94

2)
A trust fund will pay you $1200 per month for life once you turn 18. You are currently 9. Interest rates are expected to be 4.12% compounded quarterly. What is the current value of your trust fund?
2)
_______ A)
$244344.29
B)
$253344.29
C)
$243344.29
D)
$244444.29
E)
$233344.29

3)
You have to wait for 3.25 years before starting to save for the purchase of a new car. You want to save towards the purchase of $30500 car plus GST (USE 7% GST). Your savings rate is 5.88% compounded semi-annually and you want to be able to buy this car in 4 years after the deferral period. What is the size of your quarterly deposits?
3)
_______ A)
$1285.60
B)
$1852.60
C)
$1825.60
D)
$1885.60
E)
$1258.60

4)
Starting in 5 years you want to be able to withdraw $6220 every six months for 7.5 years. You want to deposit a single amount immediately and then let it grow at a rate of 4.88% compounded quarterly. How much do you have deposit?
4)
_______ A)
$62116.62
B)
$61216.62
C)
$62226.62
D)
$62216.62
E)
$61126.62

5)
A trust fund will start to pay you $15200 per year at the start of each year once you turn 18. The prevailing interest rate is 8.79% compounded annually. For how long can you receive payments if you are celebrating your 14th birthday today and the current value of your trust fund is $111345?
5)
_______ A)
20.97 years