1) An office supply company has purchased a light duty delivery truck for $35,000. It is anticipated that the purchase of the truck will increase the company's revenue by $16,300 annually, while the associated operating expenses are expected to be $5,300 per year. The truck's market value is expected to decrease by $2,500 each year it is in service. If the company plans to keep the truck for five years, what is the annual worth of this investment? MARR = 15% per year.

2) What is the maximum price you will pay for a bond with a face value of $2,000 and a coupon rate of 15%, paid annually, if you want a yield to maturity of 12%? Assume that the bond will mature in 12 years, and the first payment will be received in 1 year.

3) The winner of a state lottery will receive $5,500 per week for the rest of her life. If the winner's interest rate is 7.2% per year compounded weekly, what is the present worth of this jackpot?

4) Elin purchased a used car for $15,000. She wrote a check for $3,000 as a down payment for the car and financed the $12,000 balance. The annual percentage rate (APR) is 12% compounded monthly, and the loan is to be repaid in equal monthly instalments over the next four years. Elin's monthly car payment is most nearly which of the following?

5) A company has issued 10-year bonds, with a face value of $1 million in $1,000 units. Interest at 10% is paid quarterly. If an investor desires to earn 16% nominal interest (compounded quarterly) on $10,000 worth of these bonds, what would the purchase price have to be?

6) You recently purchased a Sirius satellite receiver. The monthly subscription rate is $12.95. You can either pay on a monthly basis or prepay an entire year and receive the 13th month free. Assuming you will maintain your subscription for at least 13 months, what is the effective annual rate of return on your investment if you choose to prepay for the entire year? All payments are due at the beginning of the month

7) With interest at 10% compounded annually, how much money is required today to provide a perpetual income of $15,320 per year?

8) If you invest $4,125 in a venture, you will receive $1,250 per year for the next 20 years. Assuming 15% interest, what is the discounted payback period for your investment?

9) What is the internal rate of return in the following cash flow? Year End 0 1 2 3 4 Cash Flow$ -$4,000 1,250 1,250 1,250 1,250

10) The "Arctic Express" mutual fund company invests its monies in Russia. They claim that money invested with them will quadruple in value over the next 10 years. Suppose you decide to invest $200 per month for the next 10 years in this fund. If their claim is true, what effective annual rate of return (IRR) will you have earned in this fund?