Questions -
Question 1: What will be the maturity value of $5,000 deposited in a three-year certificate of deposit that earns 5 percent interest compounded semiannually?
Question 2: Heidi has just signed a $145,000 mortgage on a house. The mortgage is for 15 years at a 5.25% interest rate. What will Heidi's monthly payment be?
Question 3: Miranda wants to open a flower shop in four years. After completing her planning process, Miranda estimates she will need $50,000 to start her business. How much money must she set aside today if she can earn 6 percent compounded semiannually?
Question 4: Kylee is 22 years old and just finished college. She would like to purchase a house by the time she turns 30. If she put aside $2,500 each quarter starting today and earned an interest rate of 8 percent, how much money will Kylee have available for a down payment?
Question 5: Brent invested $10,000 on March 1, 2013, and in return he received a total of $10,655, which he will collect on March 1, 2014. What is the rate of return on Brent's investment?
Question 6: Bechtel Corporation is contemplating investing in a coal mine. An investment of $2,500,000 would be made for one year with the following potential outcomes:
|
Rate of Return
|
Probability of Outcome
|
|
12.5%
|
0.20
|
|
7.5%
|
0.30
|
|
6.0%
|
0.40
|
|
2.5%
|
0.10
|
What is the expected rate of return for this investment?