1)On January 1 of the years 2015, 2016, and 2017, you received $15,000. If your investments earn 20% per year, how much money would you have on January 1, 2017?

2) The Smalltown Limousine Company is going to buy an $80,000 limousine today. The executives estimate that the limousine will generate the following profits

during each of the next 5 years.

Year 1: $30,000

Year 2 : $25, 000

Year 3: $15, 000

Year 4: $7,000

Year 5: $5,000

The payback period for the limousine is:

• between 1 and 2 years
• between 2 and 3 years
• between 3 and 4 years
• between 4 and 5 years
• None of the above

3)Last year, a barber shop generated $100,000 in profit. Assume that the shop's profits grow at 5% per year and that cash flows are discounted at 10% per year. If profits are received at the end of each year, what is the present value of all the shop's future profits?

• $1,500,000
• $2,000,000
• $2,500,000
• $2,100,000
• $3,000,000