1. Harold just hit the jackpot in Las Vegas and won $25,000! If he invests it now, at a 10% interest rate, how much will it be worth 15 years from now?
2. Curtis would like to have $3,000,000 saved by the time he retires 40 years from now. How much does he need to invest now at a 12% interest rate to fund his retirement goal?
3. Assume that Ramona accumulates savings of $1.0 million by the time she retires. If she invests this savings at 12%, how much money will she be able to withdraw at the end of each year for 15 years?
4. Ivana plans to invest $3,000 at the end of each year for the next eight years. Assuming a 12% interest rate, what will her investment be worth eight years from now?
5. Assuming a 12% interest rate, how much would Amanda have to invest now to be able to withdraw $13,000 at the end of every year for the next nine years?
6. Chuck is considering a capital investment that costs $510,000 and will provide the following net cash inflows:
Year Net Cash Inflow
1 ....................................................................................................... $300,000
2 ....................................................................................................... $198,000
3 ....................................................................................................... $106,000
Using a hurdle rate of 10%, find the NPV of the investment.
7. What is the IRR of the capital investment described in Question 6?