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Introduction to F. — Assignment 2

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Introduction to F. — Assignment 2
Feedback — Assignment 2

You have submitted this Assignment on Sun 5 Aug 2012 2:32:29 AM PDT. You achieved a score of 90.00 out of 100.00.
Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc.). Enter all dollars without decimals and all interest rates with up to two decimals. Read the syllabus for examples. The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment adds up to 100.
Question 1

(5 points) Qin deposits his first paycheck in the bank. The annual interest rate is 12%, but interest is compounded quarterly. The EAR is:
Your Answer Score Explanation
12.55 5.00 Correct. You know compounding and how to calculate EAR.
Total 5.00 / 5.00
Question Explanation

Basics of compounding; mechanics.
Question 2

(5 points) Gloria is 35 and trying to plan for retirement. She has put a budget together and plans to save $4,800 per year, starting at the end of this year, in a retirement fund until she is 65. Assume that she can make 7% on her account. How much will she have for retirement at age 65?
Your Answer Score Explanation
453412 5.00 Correct. You know how to calculate the FV of an annuity.
Total 5.00 / 5.00
Question Explanation

FV of an annuity calculation. She should have a minimum of $144,000. Why?
Question 3

(5 points) Mohammad has just turned 21 and now has access to the money his parents have been putting away in an account for him since he was 5 years old. His mother has asked him to guess what his account is worth given that they have invested $1,000 every year in the account starting on his 5th birthday and have just made one. The interest rate on the account has been 3.5% annually. How much is Mohammad’s account worth today? (Enter just the number without the $ sign or a comma; round off decimals.)
Answer for Question 3

Your Answer

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