1. Irving just hit the jackpot in Las Vegas and won $45,000! If he invests it now at a 14% interest rate, how much will it be worth in 20 years?
2. Forrest would like to have $4,000,000 saved by the time he retires in 30 years. How much does he need to invest now at a 10% interest rate to fund his retirement goal?
3. Assume that Vivian accumulates savings of $2 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 20 years?
4. Donna plans to invest $3,000 at the end of each year for the next eight years.
Assuming a 10% interest rate, what will her investment be worth eight years from now?
5. Assuming a 6% interest rate, how much would Vanna have to invest now to be able to withdraw $13,000 at the end of each year for the next ten years?
6. Ray is considering a capital investment that costs $510,000 and will provide the following net cash inflows:
Year Net Cash Inflow
1 ...................................................................................................... $308,000
2 ...................................................................................................... $200,000
3 ...................................................................................................... $102,000
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?