FIN 420 Week 3 DQ 1
1 Carla Lopez deposits $ 2,500 a year into her retirement account . If these funds have an average earning of 8 percent over the 40 years until her retirement , what will be the value of her retirement account ? 2 An ATM with a service fee of $ 2 is used by a person 100 times in a year . What would be the future value in 10 years ( use a 3 percent rate ) of the annual amount paid in ATM fees ? 3 If a person spends $ 10 a week on coffee ( assume $ 500 a year ), what would be the future value of that amount over 10 years if the funds were deposited in an account earning 3 percent ? 4 A financial company that advertises on television will pay you $ 60,000 now for annual payments of $ 10,000 that you are expected to receive for a legal settlement over the next 10 years . What is the present value of this assuming the time value of the money at 10 %? 5 Brenda plans to reduce her saving ( that is , she will spend more ) by $ 50 a month . What would be the foregone future value of this reduced saving over the next 10 years ? ( Assume monthly cash flows , and an annual interest rate of 4 percent .) ===================================================
FIN 420 Week 3 DQ 1
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Evaluate your personal risk tolerance using Exhibit 11-2 A Quick Test to Measure Investment Risk in Ch . 11 of Focus on Personal Finance . Based on your results , were you considered more conservative or less conservative ? What factors affected your investment choices ? Consider a friend or family member who is more conservative or less conservative than you . How do their money management behaviors differ from your own ? ===================================================