1

Assume an interest rate of 8% per year. How much would you lose over 11 years if you had to give up interest on the interest-that is, if you received 88% instead of compounded interest?

a) 27.1% b) 88% c) 53.4% d) 45.2%

2

What is the present value of receiving $1,950 a year for 30 years if you expect a rate of return of 6% a year?

a)$26,841 b)$29,620 c)$10,681 d) $58,500

3.What is the present value of receiving $1,950 a year for 30 years if you expect a rate of return of 6% a year?

a)$340 b)$242 c) $124 d) $975

4

.Use the table below to answer the following questions:
	Present Value of 1 Factor		Present Value of an Annuity of 1 Factor
Period	1/2 Yr	Full-Yr	1/2 Yr	Full-Yr
1	0.9578	0.9174	0.9578	0.9174
2	0.9174	0.8417	1.8753	1.7591
3	0.8787	0.7722	2.7540	2.5313
4	0.8417	0.7084	3.5957	3.2397
5	0.8062	0.6499	4.4019	3.8897
6	0.7722	0.5963	5.1740	4.4859
Assumption: Required annual effective rate (EPR) of return is 9%.

If an investment pays you $54,000 every 6 months for 3 years, what is its present value?

a) $273,380 b) $250,193 c) $279,396 d) $291,703

5

se the table below to answer the following questions:
	Present Value of 1 Factor		Present Value of an Annuity of 1 Factor
Period	1/2 Yr	Full-Yr	1/2 Yr	Full-Yr
1	0.9578	0.9174	0.9578	0.9174
2	0.9174	0.8417	1.8753	1.7591
3	0.8787	0.7722	2.7540	2.5313
4	0.8417	0.7084	3.5957	3.2397
5	0.8062	0.6499	4.4019	3.8897
6	0.7722	0.5963	5.1740	4.4859
Assumption: Required annual effective rate (EPR) of return is 9%.

If an investment pays you $54,000 every 6 months for 3 years, starting at the beginning of each 6 month period, what is its present value?

a) $250,193 b) $273,380 C) $279,396 d) $291,703

6.

Use the table below to answer the following questions:
	Present Value of 1 Factor		Present Value of an Annuity of 1 Factor
Period	1/2 Yr	Full-Yr	1/2 Yr	Full-Yr
1	0.9578	0.9174	0.9578	0.9174
2	0.9174	0.8417	1.8753	1.7591
3	0.8787	0.7722	2.7540	2.5313
4	0.8417	0.7084	3.5957	3.2397
5	0.8062	0.6499	4.4019	3.8897
6	0.7722	0.5963	5.1740	4.4859
Assumption: Required annual effective rate (EPR) of return is 9%.

If an investment pays you $324,000 at the end of 3 years, what is its present value?

a) $273,380 b) $250,193 c) $279,396 d) $291,703