1.

If you invest Sh.20, 000 today, how much will you have in 25 years at 12 percent?

2.

You will receive Sh. 20,000 five years from now. The discount rate is 8 percent. What is the value of

your investment today?

3.

An investment promises to pay the indicated amounts for the period shown

Year

1

2

3

4

5

Cash Flow

5,000

6,000

3,000

2,000

1,500

Compute the Value of investment today if the appropriate rate is 10 Percent.

4.

You are making the following deposits into an investment that earns annual rate of 10 percent.

Year

1

2

3

4

5

Cash Flow

5,000

6,000

3,000

2,000

1,500

What will be the value of the investment at the end of the five year period?

5.

Assume you are making Sh. 5,000 deposit each year into an investment for 15 years earning an

annual rate of 10 percent. What will be the value of the investment at the end of the fifteen year

period?

6.

Mr. John has been offered a special set of annuities by his insurance company, whereby he will

receive sh. 20,000 a year for 20 years.

(a)

How much would he be willing to pay for the this policy , if the discount rate is 8 percent

and the

annuities are paid at the end of each year

(b)

How much would he be willing to pay if the discount rate is 8 percent

and the annuities are paid at

the beginning of each year

7.

Mr. Pesa has been offered a special set of annuities by his insurance company, whereby he will

receive sh. 20,000 a year for the next 15 years and sh. 10,000 a year for the following 25 years.

(a)

How much would he be willing to pay for the this policy , if the discount rate is 8 percent

and the

annuities are paid at the end of each year

(b)

How much would he be willing to pay if the discount rate is 8 percent

and the annuities are paid at

the beginning of each year