1. Assume you are told that by investing $100,000 now, you will receive $10,000 per year starting in year 5 and continuing forever. If you accept the offer, the rate of return on the investment is:

A. Less than 10% per year

B. 0% per year

C. 10% per year

D. Over 10% per year

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2. If you invest $5,123 in a venture now, and will receive $1,110 per year for the next 20 years; assuming 10% interest, what is the discounted payback period for your investment?

A. 9 years

B. 8 years

C. 7 years

D. 6 years

E. 5 years

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3. An environmental testing company needs to purchase 40,000 worth of equipment 2 years from now. At an interest rate of 20% per year, compounded pounded quarterly, the present worth of the equipment is closest to:

A. $27,070

B. $27,800

C. $26,450

D. $28,220

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4. A steel fabrication company invested 800.000 in a new shearing unit. At an annual interest rate of 12%, compounded monthly, the monthly income required to recover the investment in 3 years is approximately:

A. $221,930

B. $31,240

C. $29,160

D. $26,570

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5. If compounding is monthly, find the nominal interest rate that will a 43,000 single payment at the end of 4 years equivalent to a 2,000 quarterly payment make over 4 years.

A. 16.08%

B. 16.40%

C. 15.00%

D. 15.50%

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