Module 4 Homework Problems/Questions (7 total; 100 points) Instructions: Please answer each of the seven (7) practice problems

below. Also, please also show as much of your solution steps as is feasible in the space provided beneath each problem. Finally, please round your final answers to two decimal placesthis implies if a problem is asking you to derive a final answer in percent terms, your calculator should be set to four decimal places. Good luck! 1. The earnings of a company have grown from $2.00 per share to $4.00 per share over a nine year time period. Determine the compound annual growth rate.

2. An individual is 35 years old today and is beginning to plan for his retirement. He wants to set aside an equal amount at the end of each of the next 25 years so that he can retire at age 60. He expects to live to the maximum age of 80 and wants to be able to withdraw $25,000 per year from the account on his 61st through 80th birthdays. The account is expected to earn 10 percent per annum for the entire period of time. Determine the size of the annual deposits that must be made by this individual.

3. Your employer makes quarterly (end of period) payments of $30,000 into a pension fund earning 12 percent per year compounded quarterly for 10 years. How much interest will the fund have earned in 10 years?

4. In six years your daughter will be going to college. You wish to have a fund that will provide her $10,000 per year (end of year) for each of her four years in college. How much must you put into that fund today if the fund will earn 10 percent in each of the 10 years?

5. A local bank offers 4-year certificates of deposit (CD) at a 12 percent annual nominal interest rate compounded quarterly. Determine how much additional interest you will earn over 4 years on a $10,000 CD that is compounded quarterly compared with one that is compounded annually.

6. Many IRA funds argue that investors should invest at the beginning of the year rather than at the end of the year. What is the difference to an investor who invests $2,000 per year at 11 percent over a 30 year period?

7. Your bank has just given your business a $20,000 term loan to pay for a new machine. The loan requires five equal annual end of the year payments. If the loan provides the bank with a 12 percent return (i.e., the interest rate on the loan), what will be the annual payments on the loan? After the loan has been fully amortized (paid off), how much has your business paid in total interest charges?