Acc FINAL exam: time value of money and financial investments

If you invest $18,000 today, how much will you have after 25 years @ 9%?

(a)  

If you invest $650 per month (end of month), how much will you have after 1 @ 24%?

(a)  

If someone offers you payment terms of (1) $500 per month for 1 year @ 12% or (2) $970 per month for 2 years @ 24%. Calculate the results for both and indicate which one you should accept. (payment is due at the beginning of the month)

(Type first or second)

(a)  

How much do you need to invest today to have $1,500,000 after 20 years at 11% rate of return?

(a)  

A project requires a $34,000 initial investment and is expected to generate end-of-period annual cash inflows as follows: Year 1: $15,500 Year 2: $16,500 Year 3: $15,500 Assuming a discount rate of 9%, what is the net present value of this investment?

(a)  

A project requires a $11,000 initial investment and is expected to generate end-of-period annual cash inflows of $11,500 (per year) for the next six years (end of year). Assuming a discount rate of 7%, what is the net present value of this investment?

(a)  

Calculate the first year compounding interest for an investment of $375 per month at a rate of return of 10%?

(annual rate of return at age 23?)

(a)  

Calculate the 401k match, employee contributions, and total annual investment with the following characteristics:

$0.75 on the $1 up to 6% and your salary is $60,000

What is employee's contribution?

• $1,500.00

• $2,700.00 

• $3,600.00 

• $6,300.00 

Explain how Traditional IRA works.

Paycheck

• - Taxes

• = Take home pay

• you dont get taxed when you take your money out. Only when you put your money in .

• investing after taxes - take home pay

• paying your taxes now you can pay them at a lower rate later

• investing before taxes - paycheck

• Paying taxes when you pull money out, and cannot touch until your 63 years old unless you pay a 10% penalty of taxes

Explain how a Roth IRA works.

Paycheck

• - Taxes

• = Take home pay

• you dont get taxed when you take your money out only when but you put your money in

• Paying taxes when you pull money out, and cannot touch until your 63 years old unless you pay a 10% penalty of taxes

• You pay your taxes now so you can pay them at a lower rate later.

• investing before Taxes - paycheck

• Investing after taxes - take home pay