ASSIGNMENT 01

FIN 301 (B)

SPRING 2020
DEADLINE- 28-01-2020

1. An investment of $100 today is worth $116.64 at the end of two years if it earns an
annual interest rate of 8%. How much interest is earned in the first year and how much in
the second year of this investment?

2. Jasmine and her spouse have saved $5,500 for a 12-day cruise vacation in Europe. The
couple needs $6,000 for a "nice" cabin or $7,000 for a "luxury" cabin. If cabin prices are
expected to remain constant for the next three years and Jasmine expects to earn 5% per
year on her investments, will the couple's savings be enough to afford the "nice" cabin in
three years? Can they afford the luxury cabin? Why or why not?

3. A home improvement firm has quoted a price of $9,800 to fix up John's backyard. Five
years ago, John put $7,500 into a home improvement account that has earned an average
of 5.25% per year. Does John have enough money in his account to pay for the backyard
fix-up?

4. You wish to make a sizeable down payment on a house and you currently have $18,325
invested at an annual rate of 4.75%. How much money will be in the account in 2.5 years
if it continues to earn at its present rate?

5.
6. Mr. Saiful has just joined as a faculty in IUBAT. He has a plan to start his PhD in
Australia when he has enough savings. According to his calculation he will need around
1,000,000 tk for his PhD program. Right now Mr. Saiful can save 120,000 tk per year and
after the 1st year he can earn 9% on his savings. How long it will take for Mr. Saiful to
accumulate that 1,000,000 tk for his PhD in Australia?