The financial manager of Blackbelt Technologies wishes

to determine the standard deviation from a proposed investment project. The

expected returns from the project are related to the future performance of the

economy over the period, as follows:

What is the standard deviation of the proposed

investment project?

Your grandfather invested a

lump sum 18 years ago at 5% interest. Today, he gave you the proceeds of that

investment, which amounted to R6 649,93 in total. How much did your

grandfather originally invest?

The Harris Family

Entertainment Club deposited R3 600 in an investment account a year ago,

with the intention of purchasing new equipment in four years’ time. Today, it

is adding a further R5 000 to this account. Plans are to make a final deposit

of R7 500 in the account next year. How much will be available when the family

are ready to buy the equipment, assuming the investment earns a 7% rate of

return?

Gideon

took out a R150 000 loan this morning, to buy a house. The interest rate on a

mortgage is 7,35%. The loan is to be repaid in equal monthly payments over 20

years. The first payment is due one month from today. How much of the second

payment applies to the principal balance? (Assume that each month is equal to

1/12 of a year.)

Today,

you are retiring. You have a total of R411 016 in retirement savings, and have

the funds invested such that you expect to earn an average of 7,10% interest compounded

monthly on this money, throughout your retirement years. You want to withdraw

R2 500 at the beginning of every month, starting today. How long will it be

until you run out of money? 

You

are thinking about changing employment. Your goal is to work for three years

and then return to university full-time, in pursuit of an advanced degree. A

potential employer just offered you an annual salary of R55 000, R60 000 and R65

000 a year for the next three years, respectively. All salary payments will be made

as lump sum payments at the end of each year. The offer also includes a

starting bonus of R4 500, payable immediately. What is this offer worth to

you today, at a discount rate of 8,25%?

Nathaniel

would like to establish a trust fund that will provide R380 000 a year, forever,

for his descendants. The trust fund will be invested very conservatively, so

the expected rate of return is only 6,45%. How much money must he deposit today,

to fund this gift for his descendants?

Ruggiero

Brothers Oil has an R85 000 liability it must pay four years from today. The

company is opening a savings account, so that the entire amount will be

available when this debt needs to be paid. The plan is to make an initial

deposit today, and then deposit an additional R16 000 each year for the next

four years, starting one year from today. The account pays a 6% rate of return.

How much does the firm need to deposit today?

You are scheduled to

receive annual payments of R15 000 for each of the next 13 years. The discount

rate is 9%. What is the difference in the present value, if you receive these

payments at the beginning rather than at the end of each year?

Talitha

will sell her bicycle shop to you for R250 000, with seller financing at a 6%

nominal annual rate. The terms of the loan will require you to make 12 equal

end-of-month payments per year for four years, and then make an additional

final (balloon) payment of R50 000 at the end of the last month. What will your

equal monthly payments be?