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1. The rate of return on a 30-year investment is 4.35%. What is the present value of this investment if it pays $100,000 30 years later?

Question 2

1. You started an education fund for your child. You are expecting him/her to attend college 18 years from now. According to statistics, the expected amount you will need 18 years later should be $300,000. If the fund provides a rate of return of 10% per year, compounded annually, and no additional contribution is made to the fund, how much do you need to deposit today to meet your need 18 years later?

Question 3

1. You have $50,000 to start an education fund for your child. You are expecting him/her to attend college 18 years from now. According to statistics, the expected amount you will need 18 years later should be $300,000. What is the required rate of return of your fund in order to meet your need 18 years from now? (Write your answer in decimal format, for example, write 0.05 for 5%)

Question 4

1. The required rate of return of an investor is 8.5%. An investment provides the following cash flow:

   Year	Cash Flow
   1	$5000
   2	$6400
   3	$9000

   What is the present value of this investment?

Question 5

1. You received a promotional mail from your banking advertising a new credit card with a stated rate of 15.99% per year. What is the effective annual interest rate of this credit card that compounds monthly?

Question 6

1. Given the following yield curve, what is the two-year forward rate 3 years from now? Use decimal format in your answer. For example, 5% should be written as 0.05. Keep 4 decimal places for your answer.

   Maturity	Annual Rate
   1 yr	0.28%
   3 yr	1.10%
   5 yr	1.71%

Question 7

1. An20-year annuity pays$500a year at year end.If the annuity's first cash flow starts at the end of year1and the annualinterest rate is4%,what is the present value of this annuity?

Question 8

1. You just won a lottery of$1,000,000.The lottery payment is made in the form of anannuity duewith the first payment made today.The lottery pays$10,000every month for100months(8years and4months).If the proper discount rate is4%per year, what is the actual present value of your winning?

Question 9

1. You are purchasing a new house at $500,000 in Cincinnati.You're making the purchase with an initial deposit of $200,000 and the rest with a30-year fixed rate mortgage with an interest rate of 3.5% per year with payments made monthly.Excluding all fees, what is your monthly mortgage payment?

Question 10

1. Every month,your employer deposits$1200into your401-K account,with the first payment made1month from now.The stated annualrate of return on401-K account is12%. How much will you have in your401-K account after working for5years,assuming no additional contribution was made?

Question 11

1. Ms.Gaois thinking of investing in an annuity that pays her $10,000 in one year, and this payment keeps growing by 1% per year till the last payment that occurs 20 years from today. What is the fair value of this investment if the discount rate is 10%?

Question 12

1. A project brings the following cash flow to the company. The company uses its WACC (weighted-average cost of capital) as discount rates at 12%.

   Years	Start CF	Growth Rate
   1-3	$100,000	2%
   4-6	$200,000	8%
   7- 10	$80,000	1%

   Omit "$" and "," in your answer. Write ONLY numbers. Round to2 decimalplaces in all answers submitted.

   (1) What is the present value of cash flows from Year 1 to 3?

   (2) What is thepresent valueof cash flows from year 4 to 6? (Hint: Discount back to PRESENT, not year 4)

   (3) Whatis thepresent valueof cash flows from year 7 to 10?

   (4) What is the PV of this project?