Time Value of Money

Answer all of the following questions. For separately answer, show your campaign to halt full points (stating the answer alone is not sufficient). 1. pack a userid/password and join group MGF301UB (password = mgf301ub) at Stocksquest.com. details are attached to this assignment. Invest at least $90,000 constitutional of your $100,000 portfolio in any number of stocks from 1 to 10. Turn in your userid and a printout (or summary) of your stock selections with this assignment. See Attatchments 2. Your uncle died last family and left(a) you money in his will. You are to receive $50,000 in iv years (i.e., in clock 4). (a)What is the value of the inheritance straightaway (in time 0) if the appropriate discount rate is 6% and you heterogeneous per year? PV = (future payment)/(1+r)t PV = (50,000)/(1+.06)4 PV = $39,604.68 (b)If you invest the money when you receive it in time 4, how much will it grow to 20 years from today (i.e., in time 20) if you earn 6% each year? FV = PV * (1+r)t FV = (50,000/(1+r)t) * (1+r)t FV = (50,000/(1+.06)4) * (1+.06)20 FV = $127,017.58 3.Your neighbor is buying a new recreational fomite (RV). If he buys the RV for cash, the price is $32,000. Alternatively, he could buy the RV for monthly payments of $645 at the end of each month for 60 months.

At what discount rate, will the two options be as attractive (using monthly compounding)? PV = C [(1/r) - (1/(r (1 + r)t)] 32,000 = 645 [(1/r) - (1/(r(1 + r)60)] Used Microsoft Excel defrayal Function =PMT(0.006457,60,32000)PMT = 645.00 Monthly Rate = 0.6457% 4. (a)If you will be making enough prepares into a retirement account for 5 years (with each payment at the end of the year), how much must you deposit each year if the account earns 7% compounded annually and you wish to have $100,000 after 30 years? PV = (FV)/(1+r)t PV = 100,000/(1.07)30 PV = $13,136.71 PV = C*[(1/r) - (1/(r(1+r)t)]annuity C = 13136.71/[(1/.07) ? (1/(.07(1.07)5)] C = deposit $3,203.92 a year... If you want to get a full essay, order it on our website: Ordercustompaper.com

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