Question 1

In 1903, the winner of a competition was paid $50. In 2017, the winner's prize was $235,000. What will the winner's prize be in 2040 if the prize continues increasing at the same rate? (Do not round intermediate calculations. Round your answer to the nearest $500.)

Accepted Answer

The answer of In 1903, the winner of a competition...

Question 2

Assume the average vehicle selling price in the United States last year was $36,420. The average price five years earlier was $31,208. What was the annual increase in the selling price over this time period?

Accepted Answer

The answer of Assume the average vehicle selling price in...

Question 3

You will receive $4,000 at graduation 3 years from now. You plan on investing this money at 5 percent annual interest until you have accumulated $50,000. How many years from today will it be when this occurs?

Accepted Answer

The answer of You will receive $4,000 at graduation 3...

Question 4

You're trying to save to buy a new $68,000 sports car. Currently, you have saved $36,840 which is invested at 4.9 percent annual interest. How many years will it be before you purchase the car, assuming the price of the car remains constant?

Accepted Answer

Using the formula for compound interest:
A = P(1 + r/n)^(nt)
where A is the final amount, P is the principal (initial amount), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the time in years.

We want to solve for t, so we can rearrange the formula to isolate t:
t = (log(A/P) / log(1 + r/n)) / n

Plugging in the values given in the problem:
A = $68,000
P = $36,840
r = 4.9% = 0.049
n = 1 (compounded annually)

t = (log(68000/36840) / log(1 + 0.049/1)) / 1
t = 12.81 years (rounded to two decimal places)

Therefore, it will take approximately 12.81 years to save enough money to purchase the car. The answer is C.

Quiz 5: Introduction to Valuation: The Time Value of Money

In 1903, the winner of a competition was paid $50. In 2017, the winner's prize was $235,000. What will the winner's prize be in 2040 if the prize continues increasing at the same rate? (Do not round intermediate calculations. Round your answer to the nearest $500.)

Assume the average vehicle selling price in the United States last year was $36,420. The average price five years earlier was $31,208. What was the annual increase in the selling price over this time period?

You will receive $4,000 at graduation 3 years from now. You plan on investing this money at 5 percent annual interest until you have accumulated $50,000. How many years from today will it be when this occurs?

You're trying to save to buy a new $68,000 sports car. Currently, you have saved $36,840 which is invested at 4.9 percent annual interest. How many years will it be before you purchase the car, assuming the price of the car remains constant?