# 2024 – 10 How much would you have to invest today to receive a 12 000 in 6 years

Chapter 9 – 2024

**10. How much would you have to invest today to receive:**

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**a.) $12,000 in 6 years at 12 percent?**

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**b.) $15,000 in 15 years at 8 percent? **

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**c.) $5,000 each year for 10 years at 8 percent?**

**Appendix D (c and d)**

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**d.) $40,000 each year for 40 years at 5 percent?**

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**11. If you invest $8,000 per period for the following number of periods, how much would you have?**

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**a.) 7 years at 9 percent.**

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**b.) 40 years at 11 percent.**

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**12. You invest a single amount of $12,000 for 5 years at 10 percent. At the end of 5 years you take the proceeds and invest them for 12 years at 15 percent. How much will you have after 17 years?**

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**13. Mrs. Crawford will receive $6,500 a year for the next 14 years from her trust. If an 18 percent interest rate is applied, what is the current value of the future payments?**

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**15. Sherwin Williams will receive $18,000 a year for the next 25 years as a result of a picture he has painted. If a discount rate of 10 percent is applied, should he be willing to sell out his future rights for $160,000?**

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**17. The Western Sweepstakes has just informed you that you have won $1 million. The amount is to be paid out at the rate of $50,000 a year for the next 20 years. With a discount rate of 12 percent, what is the present value of your winnings?**

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**18. Rita Gonzales won the $60 million lottery. She is to receive $1 million a year for the next 50 years plus an additional lump sum of $10 million after 50 years. The discount rate is 10 percent. What is the current value of her winnings?**

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**26. Determine the amount of money in a savings account at the end of five years, given an initial deposit of $3,000 and an 8 percent annual interest rate when interest is compounded (a) annually, (b) semiannually, and (c) quarterly. **

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**37. You wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $12,000 for 25 years after retirement. During the period before retirement you can earn 8 percent annually, while after retirement you can earn 10 percent on your money. **

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**What annual contributions to the retirement fund will allow you to receive the $12,000 annuity?**

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**44. Jim Thorpe borrows $70,000 toward the purchase of a home at 12 percent interest. His mortgage is for 30 years. **

**a.) How much will his annual payments be? (Although home payments are usually on a monthly basis, we shall do our analysis on an annual basis for ease of computation. We will get a reasonably accurate answer.)**

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**b.) How much interest will he pay over the life of the loan?**

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**c.) How much should he be willing to pay to get out of a 12 percent mortgage and into a 10 percent mortgage with 30 years remaining on the mortgage? Suggestion: Find the annual savings and then discount them back to the present at the current interest rate (10 percent). **

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