FIRST CITY BANK FINANCE

First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City
Bank pays 7 percent interest compounded annually.
If you made a $70,000 deposit in each bank, how much more money would you earn from your Second
City Bank account at the end of 9 years? (Do not round intermediate calculations and round your
final answer to 2 decimal places. (e.g., 32.16))
Difference in accounts
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You are planning to save for retirement over the next 25 years. To do this, you will invest $730 a month in
a stock account and $330 a month in a bond account. The return of the stock account is expected to be
9.3 percent, and the bond account will pay 5.3 percent. When you retire, you will combine your money
into an account with an 6.3 percent return.
How much can you withdraw each month from your account assuming a 20-year withdrawal period? (Do
not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Withdrawal
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$ per month
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Mark Weinstein has been working on an advanced technology in laser eye surgery. His technology will
be available in the near term. He anticipates his first annual cash flow from the technology to be
$182,000 received two years from today. Subsequent annual cash flows will grow at 4.2 percent in
perpetuity.
What is the present value of the technology if the discount rate is 9 percent? (Do not round
intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Present value
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$

& resources

What is the present value of an annuity of $6,200 per year, with the first cash flow received three years
from today and the last one received 25 years from today? Use a discount rate of 8 percent. (Do not
round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Present value
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$

& resources

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