1. Assume that the interest rate is greater than zero. Which of the following cash-inflow streams totaling $1,500 would you prefer? The cash flows are listed in order for Year 1, Year 2, and Year 3 respectively.

Select one:

A. $700 $500 $300

B. $300 $500 $700

C. $500 $500 $500

D. Any of the above, since they each sum to $1,500.

2. You have just agreed to a new loan and have purchased a $3,000 computer today. The loan has a 19.6% annual interest rate, compounded monthly. The minimum monthly payment is $58 and you do not expect to ever pay more than the minimum payment. Assuming no additional charges or costs will occur with this loan, approximately what will you owe on the loan at the end of 3 years (36 months) when you expect to need another new computer?

Select one:

A. $2,676

B. $2,676

C. $2,304

D. $2,088

Clear my choice

3. Solve for the present value, PV, given:

Future value: $10,000 Interest rate:5% Number of periods:5

Do not round intermediary calculations.Use the full precision of your calculator or excel. Round final answer to 2 decimal places.

Please put your answer in the format xxxxxx.xx (no $,no commas, 2 decimal places).

Answer:

Question 30

Solve for the present value, PV, given:

Future value: $5,000 Interest rate:5.5% Number of periods:3

Do not round intermediary calculations.Use the full precision of your calculator or excel. Round final answer to 2 decimal places.

Please put your answer in the format xxxxxx.xx (no $,no commas, 2 decimal places).

Answer:

Question 31

Suppose I want to be able to withdraw $5,000 at the end of five years and withdraw $6,000 at the end of six years, leaving a zero balance in the account after the last withdrawal. If I can earn 5% on my balances, how much must I deposit today to satisfy my withdrawal needs?

Given: Hint -- There are two different future values. Treat as two separate present values, then combine.

Do not round intermediary calculations. Use the full precision of your calculator or excel. The round final answer to 2 decimal places.

Please put your answer in the format xxxxxx.xx (no $,no commas, 2 decimal places).