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1 . ) An investor just invested $ 1 0 , 0 0 0 in an investment that is expected to earn a 6 %

1.) An investor just invested $10,000 in an investment that is expected to earn a 6% interest rate.
Assuming the 6% annual return is realized, what will be the value of the investment at the
end of 25 years?
2.) If you deposit $45,000 into a 5-year CD today earning 4% interest compounded quarterly,
what would be the account balance be at the end of 5 years?
3.) A 22-year-old college student has been promised a $1 million check at this 50th birthday (28
years from today). What is the present value of the $1 million today assuming an interest rate
of 5%?
4.) An investor has been offered an investment opportunity that will pay him $25,000 every year
for 10 years, with the first payment coming one year from today. What is the present value of
the 10-year annuity at an annual interest rate of 8%?
5.) An investors savings plan consists of investing $1,000 each month for the next 15 years, with
the first $1,000 being invested one month from today. How much will the investor
accumulated at the end of 15 years, assuming an annual interest rate of 6% compounded
monthly?
6.) An individual invests $10,000 today in an investment that is expected to be worth $20,000 in 6
years. What exact annualized rate of return is the investor expecting to receive on the
investment?
7.) A college graduate just bought a new house. The home was purchased with a 30-year loan of
$350,000 with monthly payments at an interest rate of 4%. What is the amount of the monthly
loan payment?
8.) An investor is evaluating an investment that pays $50,000 for 3 consecutive years and then
$25,000 in year 4. The first $50,000 payment comes one year from today. What is the present
value of the investments cash flows at an interest rate of 10%?
9.) An investor wants to double their portfolio value every 8 years. According to the Rule of 72,
what is the approximate annual rate of return the investor must earn on the portfolio to
achieve that goal?
10.) An investor purchases one share of preferred stock of Citigroup. The share pays an annual
dividend of $68.00 every year into perpetuity. Given an interest rate of 7.0%, what is the
value of the preferred share? (Hint: Compute the present value of the future dividends).

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