UtkarshPathrabe/Introduction-to-Finance---Valuation-and-Investing

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Introduction-to-Finance---Valuation-and-Investing/Course 01 Principles of Valuation
- Time Value of Money/Module 01/Assignment 02.md
58306d4�on Jul 15, 2016
�UtkarshPathrabe�Final Commit
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Assignment 02
AttemptsScore1/310/10Question 01
$350 today is worth the SAME as $350 tomorrow.
* False
* True
Answer
* False
Explanation
$350 today is worth the SAME as $350 tomorrow.
Question 02
At an interest rate of 12% it is better to have $100 today than $100 in 3 years.
* True
* False
Answer
* True
Explanation
$100 today is worth more than $100 tomorrow.
Question 03
Shawn wants to buy a new telescope. He estimates that it will take him one year to
save the money and that the telescope will cost $200. At an interest rate of 6%,
how much does Shawn need to set aside today to purchase the telescope in one year?
(Enter just the number in dollars without the $ sign or a comma and round off
decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding
$30.50 up to $31.)
Answer
189
Explanation
PV = (FV / (1 + r) ^ n) = (200 / (1 + 0.06) ^ 1) = (200 / 1.06) = 188.679
Question 04
Jeff has $1,400 that he invests in a safe financial instrument expected to return
3% annually. Marge has $700 and invests in a more risky venture that is expected to
return 8% annually. Who has more after 29 years? And how much does he/she have in
FV terms?
* Jeff; $3,299.19
* Marge; $6,522.09
* Jeff; $63,306.39
* Marge; $72,776.16
Answer
* Marge; $6,522.09
Explanation
FV = PV * ((1 + r) ^ n)
Jeff: FV = $1400 * ((1 + 0.03) ^ 29) = $3299.19171 = $3299.19
Marge: FV = $700 * ((1 + 0.08) ^ 29) = $6522.09243 = $6522.09
Question 05
Don has just received a cash gift of $65,000 from his rich eccentric uncle. He
wants to set it aside to pay for his daughter Cynthia's college education. Cynthia
will begin college in 13 years and Don's financial advisor says that she can earn
8% interest on an investment in a special college fund. How much will Don have in
the fund when Cynthia begins college? (Enter just the number in dollars without the
$ sign or a comma and round off decimals to the closest integer, i.e., rounding
$30.49 down to $30 and rounding $30.50 up to $31.)
Answer
176776
Explanation
FV = PV * ((1 + r) ^ n) = $65000 * ((1 + 0.08) ^ 13) = $176775.542 = $176776
Question 06
Bridgette's grandparents opened a savings account for her and placed $500 in the
account. The account pays 3.0% interest. Bridgette wants to be a singer and she has
her heart set on a new karaoke machine. The machine costs $150. How much less will
the account be worth in 9 years if she buys the karaoke machine now versus leaving
the account untouched? (Enter just the number in dollars without the $ sign or a
comma and round off decimals to the closest integer, i.e., rounding $30.49 down to
$30 and rounding $30.50 up to $31.)
Answer
186
Explanation
FV = PV * ((1 + r) ^ n)
Buys karaoke machine now: FV = $350 * ((1 + 0.03) ^ 9) = $456.670613
Buys karaoke machine later: FV = $500 * ((1 + 0.03) ^ 9) = $652.38659
Difference: $652.38659 - $456.670613 = $185.715977 = $186
Question 07
Joe is getting ready to buy a car. He has $18,000 in investments earning 5.6%
annually. The car also costs $18,000. If he doesn't pay cash for the car, Joe can
get a loan at 2.7% interest for 6 years. The loan is structured so that Joe pays
one balloon payment at the end of 6 years. The balloon payment includes the
principal plus all interest accrued over 6 years. If Joe takes the loan will he
have enough money available from his investments to make the balloon payment? How
much will he be short/have to spare?
* Yes; $3,840.60
UtkarshPathrabe/Introduction-to-Finance---Valuation-and-Investing
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Introduction-to-Finance---Valuation-and-Investing/Course 01 Principles of Valuation
- Time Value of Money/Module 01/Assignment 02.md
58306d4�on Jul 15, 2016
�UtkarshPathrabe�Final Commit
1�contributor
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157 lines (126 sloc)��7.22 KB
Assignment 02
AttemptsScore1/310/10Question 01
$350 today is worth the SAME as $350 tomorrow.
* False
* True
Answer
* False
Explanation
$350 today is worth the SAME as $350 tomorrow.
Question 02
At an interest rate of 12% it is better to have $100 today than $100 in 3 years.
* True
* False
Answer
* True
Explanation
$100 today is worth more than $100 tomorrow.
Question 03
Shawn wants to buy a new telescope. He estimates that it will take him one year to
save the money and that the telescope will cost $200. At an interest rate of 6%,
how much does Shawn need to set aside today to purchase the telescope in one year?
(Enter just the number in dollars without the $ sign or a comma and round off
decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding
$30.50 up to $31.)
Answer
189
Explanation
PV = (FV / (1 + r) ^ n) = (200 / (1 + 0.06) ^ 1) = (200 / 1.06) = 188.679
Question 04
Jeff has $1,400 that he invests in a safe financial instrument expected to return
3% annually. Marge has $700 and invests in a more risky venture that is expected to
return 8% annually. Who has more after 29 years? And how much does he/she have in
FV terms?
* Jeff; $3,299.19
* Marge; $6,522.09
* Jeff; $63,306.39
* Marge; $72,776.16
Answer
* Marge; $6,522.09
Explanation
FV = PV * ((1 + r) ^ n)
Jeff: FV = $1400 * ((1 + 0.03) ^ 29) = $3299.19171 = $3299.19
Marge: FV = $700 * ((1 + 0.08) ^ 29) = $6522.09243 = $6522.09
Question 05
Don has just received a cash gift of $65,000 from his rich eccentric uncle. He
wants to set it aside to pay for his daughter Cynthia's college education. Cynthia
will begin college in 13 years and Don's financial advisor says that she can earn
8% interest on an investment in a special college fund. How much will Don have in
the fund when Cynthia begins college? (Enter just the number in dollars without the
$ sign or a comma and round off decimals to the closest integer, i.e., rounding
$30.49 down to $30 and rounding $30.50 up to $31.)
Answer
176776
Explanation
FV = PV * ((1 + r) ^ n) = $65000 * ((1 + 0.08) ^ 13) = $176775.542 = $176776
Question 06
Bridgette's grandparents opened a savings account for her and placed $500 in the
account. The account pays 3.0% interest. Bridgette wants to be a singer and she has
her heart set on a new karaoke machine. The machine costs $150. How much less will
the account be worth in 9 years if she buys the karaoke machine now versus leaving
the account untouched? (Enter just the number in dollars without the $ sign or a
comma and round off decimals to the closest integer, i.e., rounding $30.49 down to
$30 and rounding $30.50 up to $31.)
Answer
186
Explanation
FV = PV * ((1 + r) ^ n)
Buys karaoke machine now: FV = $350 * ((1 + 0.03) ^ 9) = $456.670613
Buys karaoke machine later: FV = $500 * ((1 + 0.03) ^ 9) = $652.38659
Difference: $652.38659 - $456.670613 = $185.715977 = $186
Question 07
Joe is getting ready to buy a car. He has $18,000 in investments earning 5.6%
annually. The car also costs $18,000. If he doesn't pay cash for the car, Joe can
get a loan at 2.7% interest for 6 years. The loan is structured so that Joe pays
one balloon payment at the end of 6 years. The balloon payment includes the
principal plus all interest accrued over 6 years. If Joe takes the loan will he
have enough money available from his investments to make the balloon payment? How
much will he be short/have to spare?
* Yes; $3,840.60
UtkarshPathrabe/Introduction-to-Finance---Valuation-and-Investing
�Code�Issues�0�Pull requests�0�Projects�0�Insights
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Bottom of Form
Join GitHub today
GitHub is home to over 28 million developers working together to host and review
code, manage projects, and build software together.
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Branch:�master�
Find fileCopy path
Introduction-to-Finance---Valuation-and-Investing/Course 01 Principles of Valuation
- Time Value of Money/Module 01/Assignment 02.md
58306d4�on Jul 15, 2016
�UtkarshPathrabe�Final Commit
1�contributor
RawBlameHistory
���
157 lines (126 sloc)��7.22 KB
Assignment 02
AttemptsScore1/310/10Question 01
$350 today is worth the SAME as $350 tomorrow.
* False
* True
Answer
* False
Explanation
$350 today is worth the SAME as $350 tomorrow.
Question 02
At an interest rate of 12% it is better to have $100 today than $100 in 3 years.
* True
* False
Answer
* True
Explanation
$100 today is worth more than $100 tomorrow.
Question 03
Shawn wants to buy a new telescope. He estimates that it will take him one year to
save the money and that the telescope will cost $200. At an interest rate of 6%,
how much does Shawn need to set aside today to purchase the telescope in one year?
(Enter just the number in dollars without the $ sign or a comma and round off
decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding
$30.50 up to $31.)
Answer
189
Explanation
PV = (FV / (1 + r) ^ n) = (200 / (1 + 0.06) ^ 1) = (200 / 1.06) = 188.679
Question 04
Jeff has $1,400 that he invests in a safe financial instrument expected to return
3% annually. Marge has $700 and invests in a more risky venture that is expected to
return 8% annually. Who has more after 29 years? And how much does he/she have in
FV terms?
* Jeff; $3,299.19
* Marge; $6,522.09
* Jeff; $63,306.39
* Marge; $72,776.16
Answer
* Marge; $6,522.09
Explanation
FV = PV * ((1 + r) ^ n)
Jeff: FV = $1400 * ((1 + 0.03) ^ 29) = $3299.19171 = $3299.19
Marge: FV = $700 * ((1 + 0.08) ^ 29) = $6522.09243 = $6522.09
Question 05
Don has just received a cash gift of $65,000 from his rich eccentric uncle. He
wants to set it aside to pay for his daughter Cynthia's college education. Cynthia
will begin college in 13 years and Don's financial advisor says that she can earn
8% interest on an investment in a special college fund. How much will Don have in
the fund when Cynthia begins college? (Enter just the number in dollars without the
$ sign or a comma and round off decimals to the closest integer, i.e., rounding
$30.49 down to $30 and rounding $30.50 up to $31.)
Answer
176776
Explanation
FV = PV * ((1 + r) ^ n) = $65000 * ((1 + 0.08) ^ 13) = $176775.542 = $176776
Question 06
Bridgette's grandparents opened a savings account for her and placed $500 in the
account. The account pays 3.0% interest. Bridgette wants to be a singer and she has
her heart set on a new karaoke machine. The machine costs $150. How much less will
the account be worth in 9 years if she buys the karaoke machine now versus leaving
the account untouched? (Enter just the number in dollars without the $ sign or a
comma and round off decimals to the closest integer, i.e., rounding $30.49 down to
$30 and rounding $30.50 up to $31.)
Answer
186
Explanation
FV = PV * ((1 + r) ^ n)
Buys karaoke machine now: FV = $350 * ((1 + 0.03) ^ 9) = $456.670613
Buys karaoke machine later: FV = $500 * ((1 + 0.03) ^ 9) = $652.38659
Difference: $652.38659 - $456.670613 = $185.715977 = $186
Question 07
Joe is getting ready to buy a car. He has $18,000 in investments earning 5.6%
annually. The car also costs $18,000. If he doesn't pay cash for the car, Joe can
get a loan at 2.7% interest for 6 years. The loan is structured so that Joe pays
one balloon payment at the end of 6 years. The balloon payment includes the
principal plus all interest accrued over 6 years. If Joe takes the loan will he
have enough money available from his investments to make the balloon payment? How
much will he be short/have to spare?
* Yes; $3,840.60