#1

An investment that promises the following cash flows at the ends of year 1 through 6, respectively: $5,000; $7,000; $9,000; $11,000; $13,000; $15,000. What rate of return would you expect to make on this investment if you paid $30,000 for this investment today?

a.) 15.44%

b.) 19.76%

c.) 12.94%

d.) 14.82%

e.) 17.31%

#2

Calculate the maximum amount that you would be willing to pay today for an investment that promises the following cash flows at the ends of year 1 through 6, respectively: $5,000; $7,000; $9,000; $11,000; $13,000; $15,000. Assume that your required rate of return on this investment is 9%.

a.) $44,160.95

b.) $33,670.35

c.) $39,095.75

d.) $42,614.36

e.) $41,449.66

#3

Find the present value of the following cash flow stream assuming a discount rate of 8%: A payment of $10,000 received at the end of each MONTH over the coming 4 years, followed by a payment of $5000 received at the end of each MONTH over the 6 years after that.

a.) $556,975.15

b.) $616,916.97

c.) $409,619.13

d.) $285,172.61

e.) $207, 292.84