Part 1: Â Essay
Â Describe the financial crisis of 2007- 2009. Â What were the primary causes of this financial crisis? Â Â Â
Part 2: Â
- Ira Schwab opens up a Schwab IRA and places $2,000 in his retirement account at the beginning of each year for 10 years. Â He believes the account will earn 5 percent interest per year, compounded quarterly. Â How much will he have in his retirement account in 10 years?
- The city of Glendale borrows $48 million by issuing municipal bonds to help build the Arizona Cardinals football stadium. It plans to set up a sinking fund that will repay the loan at the end of 10 years. Assume a 4 percent interest rate per year. What should the city place into the fund at the end of each year to have $48 million in the account to pay back their bondholders?Â
- Part 3: Matthew is considering several possible compensation alternatives for services he has provided as a consultant: Option A: Â Matthew could receive $8,000 today. Â Option B: Â Matthew could receive $2,500 at the end of each of the next four years. Â Option C: Â Matthew could receive $12,000 five years from now. Â Â Required:
- Calculate the present value for each Â Â Â Â Â option assuming that Matthew can earn 7 percent on any investment funds.
- Which option results in the greatest Â Â Â Â Â financial benefit to Matthew?
- Â If Matthew earns 10 percent, will that change your answer to # 2 above? Â Please explain