FINANCE 306 TEST BANK 2026 FULLY
SOLVED QUESTIONS GUARANTEED TO
PASS.
⩥ A donor wants to fund annual scholarships of $35,509 per year. The
first scholarship will be awarded 8 years from today and they will
continue each year thereafter. If the university endowment pays an
annual interest rate of 5.5%, how much cash must the donor provide
today to fully fund the scholarships? Enter your answer as a positive
number rounded to the nearest dollar. Answer: 443,822
⩥ A man wants to make a single deposit today that will pay for his
grandson's future college education. He expects college to cost $26,000
per year for 4 consecutive years. Since his grandson is not yet college-
age, the first annual bill will not be due until 12 years from today. If the
discount rate is 4%, how much money should the man deposit today in
order to fully fund the college payments? Enter your answer as a
positive number rounded to the nearest dollar. Answer: Step 1: Find
PV= C [(1/r) - (1)/r(1+r)^T]
Step 2: PV from Step 1/ (1+r)^N-1
Step 3: Answer= 61,306
⩥ An investor expects to purchase a property for $195,000 exactly 7
years from today. He wants to deposit enough money today to ensure he
can make this investment. If his account will pay him 9% per year with
, annual compounding, how much should he deposit today? Enter your
answer as a positive number and round to the nearest dollar. Answer:
106,672
⩥ You agree to purchase a $17,000 car. The dealer offers you a simple
"same as cash" financing deal in which you pay the full amount exactly
4 years from today. Alternatively, the dealer will give you a 11%
discount if you pay cash today. What is the implied interest rate on the
"same as cash" financing deal? Assume annual compounding and enter
your answer as a decimal rounded to four decimal places. That is, if your
answer is 1%, enter 0.0100. Answer: Step 1: Find price of car with the
11% discount.
Step 2: Solve for r when 15130 (1+r)^4= 17,000
Step 3: r= 0.0296
⩥ A piece of real estate will generate annual cash flow of $116,000. The
first cash flow occurs one year from today and subsequent annual cash
flows will continue indefinitely. If the discount rate is 5.7%, what is the
property's present value? Enter your answer as a positive number
rounded to the nearest dollar. Answer: 2,035,088
⩥ You plan to save $9,000 per year for each of the next 26 years, with
your first savings deposit occurring one year from today. If the savings
account pays an annual rate 5%, how much money will you have
immediately following your final deposit? Enter your answer as a
positive number rounded to the nearest dollar. Answer: 460,021
SOLVED QUESTIONS GUARANTEED TO
PASS.
⩥ A donor wants to fund annual scholarships of $35,509 per year. The
first scholarship will be awarded 8 years from today and they will
continue each year thereafter. If the university endowment pays an
annual interest rate of 5.5%, how much cash must the donor provide
today to fully fund the scholarships? Enter your answer as a positive
number rounded to the nearest dollar. Answer: 443,822
⩥ A man wants to make a single deposit today that will pay for his
grandson's future college education. He expects college to cost $26,000
per year for 4 consecutive years. Since his grandson is not yet college-
age, the first annual bill will not be due until 12 years from today. If the
discount rate is 4%, how much money should the man deposit today in
order to fully fund the college payments? Enter your answer as a
positive number rounded to the nearest dollar. Answer: Step 1: Find
PV= C [(1/r) - (1)/r(1+r)^T]
Step 2: PV from Step 1/ (1+r)^N-1
Step 3: Answer= 61,306
⩥ An investor expects to purchase a property for $195,000 exactly 7
years from today. He wants to deposit enough money today to ensure he
can make this investment. If his account will pay him 9% per year with
, annual compounding, how much should he deposit today? Enter your
answer as a positive number and round to the nearest dollar. Answer:
106,672
⩥ You agree to purchase a $17,000 car. The dealer offers you a simple
"same as cash" financing deal in which you pay the full amount exactly
4 years from today. Alternatively, the dealer will give you a 11%
discount if you pay cash today. What is the implied interest rate on the
"same as cash" financing deal? Assume annual compounding and enter
your answer as a decimal rounded to four decimal places. That is, if your
answer is 1%, enter 0.0100. Answer: Step 1: Find price of car with the
11% discount.
Step 2: Solve for r when 15130 (1+r)^4= 17,000
Step 3: r= 0.0296
⩥ A piece of real estate will generate annual cash flow of $116,000. The
first cash flow occurs one year from today and subsequent annual cash
flows will continue indefinitely. If the discount rate is 5.7%, what is the
property's present value? Enter your answer as a positive number
rounded to the nearest dollar. Answer: 2,035,088
⩥ You plan to save $9,000 per year for each of the next 26 years, with
your first savings deposit occurring one year from today. If the savings
account pays an annual rate 5%, how much money will you have
immediately following your final deposit? Enter your answer as a
positive number rounded to the nearest dollar. Answer: 460,021
