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Week2 Assignment

By | October 2012
Page 1 of 8
 Coursera - Intro to Finance (Quiz-2),
Question 1
(5 points) Carlos goes to the bank to take out a personal loan. The stated annual interest rate is 12%, but interest is compounded monthly and he will make monthly payments. The effective annual interest rate (EAR) of the loan is less than 12%. Your Answer| | Score| Explanation|

False| | 5.00| Correct. You understand compounding.|
Total| | 5.00 / 5.00| |
EXCEL Function -  EFFECT(0.12,12)  12 times Npery and rate .12 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| |
FV of an annuity calculation. She should have a minimum of $144,000. Why? Question 3
(5 points) Dominique has just turned 65 and she has deposited her annual payment of $20,000 into her retirement account. She made her first such saving deposit into this fund on her 35th birthday. Dominique has also retired and wants to figure out how much money she has in her retirement account for her retired life. You are Dominique's friend who knows finance. How much is Dominique's savings worth today given that the fund has earned an annual return of 5.5%? (Enter just the number without the $ sign or a comma; round off decimals.) Answer for Question 3

Your Answer| | Score| Explanation|
1548389| | 5.00| |
Total| | 5.00 / 5.00| |
Question 4
(5 points) Gerard has estimated that he is going to need enough in his retirement fund to withdraw $75,000 per year beginning on his 66th birthday and for 19 additional years thereafter. How much will Gerard need in his retirement account at age 65 if his fund is expected to earn an annual...

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