You need to accumulate £ 10,000.

Question 11 You need to accumulate £ 10,000. To do so, you plan to make deposits of £ 1,250 per year, with the first payment being made a year from today, in a bank account which pays 12 percent annual interest compounded annually. Your last deposit will be less than £ 1,250 if less is needed to round out to £ 10,000. How many years will it take you to reach your £ 10,000 goal, and how large will the last deposit be?

uestion 12 Your Company is planning to borrow £ 1,000,000 on a 5-year, 15 percent, annual payments, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal?

uestion 13 You are branch manager of town centre Natwest Bank, Manchester. A borrower approaches you for a term loan of £ 500,000. You agreed to give loan to be fully amortized in a period of 5 year at 10 percent, annual payment. What will be the size of each installment? What fraction of the payment made at the end of second year represents repayment of interest?

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.uestion 14

<pclass=”i1″ style=”margin-left: 1cm; text-indent: -106.3pt;”>It is now January 1, 2007. You plan to make 5 deposits of £ 100 each, on every 6 months, with the first payment being made today. If the bank pays a nominal interest rate of 12 percent, but uses semiannual compounding, how much will be in your account after 10 years?

  1. Ten years from today you must make a payment of £ 1,432.02. To prepare for this payment, you will make 5 equal deposits, beginning today and for the next 4 quarters, in a bank that pays a nominal interest rate of 12 percent, quarterly compounding. How large must each of the 5 payments

<pclass=”i1″>Question 15 The prize in last week’s Lottery was estimated to be worth £ 35 million. If you were lucky enough to win, then it will pay you £ 1.75 million per year over the next 20 years. Assume that the first installmeAshley has £ 42,180.53 in brokerage account, and plans to contribute an additional £ 5,000 every year at an annual interest rate of 12 percent. If Ashley has to accumulate £ 250,000, how many years will it take for him to reach his goal?nt is received immediately.

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  1. If interest rates are 8 percent, what is the present value of the prize?
  2. If interest rates are 8 percent, what is the future value after 20 years?
  3. How would your answers change if the payments were received at the end of each year?

ques 16

<pclass=”msonormal”>Ashley has £ 42,180.53 in brokerage account, and plans to contribute an additional £ 5,000 every year at an annual interest rate of 12 percent. If Ashley has to accumulate £ 250,000, how many years will it take for him to reach his goal?

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