1.

FOR EACH OF THE CASES SHOWN IN THE TABLE BELOW, CALCULATE THE FUTURE VALUE OF THE SINGLE CASH FLOW DEPOSITED TODAY THAT WILL BE AVAILABLE AT THE END OF THE DEPOSIT PERIOD IF THE INTEREST IS COMPOUNDED ANNUALLY, SEMI ANNUALLY AND QUARTERLY AT THE RATE SPECIFIED OVER THE GIVEN PERIOD.

2. WHAT SINGLE INVESTMENT MADE TODAY, EARNING 14% ANNUAL INTEREST WILL BE WORTH $9,000 AT THE END OF 7 YEARS?

3.WHAT IS THE PRESENT VALUE OF $7,000 TO BE RECEIVED AT THE END OF 5 YEARS IF THE DISCOUNT RATE IS 11%?

4.WHAT IS THE MOST YOU WOULD PAY TODAY FOR A PROMISE TO REPAY YOU $3,000 AT THE END OF 5 YEARS IF YOUR OPPORTUNITY COST IS 9%?

5, 6, 7 PORTFOLIO ANALYSIS:

PLEASE CALCULATE THE EXPECTED RETURN AND STANDARD DEVIATION FOR EACH OF THE THREE PORTFOLIO ALTERNATIVES.

8, 9, 10 PORTFOLIO ANALYSIS:

PLEASE CALCULATE THE EXPECTED RETURN AND STANDARD DEVIATION FOR EACH OF THE THREE PORTFOLIO ALTERNATIVES.

11, 12, 13, 14)

Macro-Micro Brew Pub is considering the purchase of one of two hops brew roasters less filling or tastes great. Both should provide a benefit over a 10 year period and each requires an investment of $125,000. Looking at the following table which includes estimates of rates of return, probabilities for pessimistic, most likely and optimistic results.

11) Range of rate of return

12) Expected Return?

13) Standard Deviation?

14) Best option?

15, 16, 17 and 18)

Atomic Blaster Bean Company is considering the purchase of one of bodacious bean burners Hickory Honey or Bean-tastic burner. Both should provide a benefit over a 10 year period and each requires an investment of $450,000. Looking at the following table which includes estimates of rates of return, probabilities for pessimistic, most likely and optimistic results.

15) Range of rate of return

16) Expected Return?

17) Standard Deviation?

18) Best option?

19-21) Bond Valuation Annual Interest:

Calculate the value of the bonds shown in the table, all of which pay interest annually:

19)

20)

21)

Extra Credit (5 points)

An airplane takes off from Montreal on Friday morning at 7:30am heading to Los Angeles, California with 117 passengers and 7 crew members aboard the plane. The plane is traveling 430 mph. California is 2000 miles away. A second plane takes off from Los Angeles airport at 9:00am heading to Montreal, Canada also on Friday morning. It has 86 passengers on board the plane and 5 crew members. The plane is traveling 440 mph. After 2 hours in flight, the planes collide head-on in a tragic accident. Where will they bury the survivorsthe United States or Canada?