# Finance Management

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6.29 Simple Interest versus Compound Interest [LO4] First Simple Bank pays 9 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match First Simple Bank over an investment of 10 years?
6.32 Calculating Annuities [LO1] You are planning to save for retirement over the next 30 years. To do this, you will invest \$800 a month in a stock account and \$400 a month in a bond account. The return of the stock account is expected to be 10 percent, and the bond account will pay 6%. When you retire, you will combine your money into an account with a 7 percent return. How much can you withdraw each month from your account assuming a 25-year withdrawal period?
[Excel] 6.6 Calculating Annuity Values [LO1] Your company will generate \$68,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.5%, what is the present value of the savings?
[Excel] 6.46 Present Value and Break-Even Interest [LO1] Consider a firm with a contract to sell an asset for \$145,000 four years from now. The asset costs \$81,000 to produce today. Given a relevant discount rate on this asset of 13 percent per year, will the firm make a profit on this asset? At what rate does the firm just break even?
[Excel] 6.70 Calculating Interest Rates [LO4] A financial planning service offers a college savings program. The plan calls for you to make six annual payments of \$13,000 each, with the first payment occurring today, your child’s 12th birthday. Beginning on your child’s 18th birthday, the plan will provide \$30,000 per year for four years. What return is this investment offering?

Extra Credit 6.61 Calculating Annuity Values [LO1] You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years

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