11 Alexa plans on Saving S3.000 a year and expects to earn an annual rate of How much will she have in her account at the end of 45 years? 3000 + 1025] @ $1,806,429 $1,838,369 $2,211,407 $2,333,572 $2,525,508 102 x Sion 12 You are offered a chance to make an investment that will earn you the following cash flows Year 1 $800 Year 2 $950 Year 3 $2,500 You can earn 4% on similar investments. What is the maximum amount you should invest? 3,778 A. B. C. D. E. $ $ $ $ $ 3,870 3,960 4,087 4,250 13 You are offered an investment that will earn you two $3,000 payments. The first payment is at the end of 4 years the second is at the end of the fifth year. What is the future value of the payments at a rate of 6%? A. B. C. D. E. $ $ $ $ $ 4,200 4,618 6,180 6,551 7,802 14 You are offered two investment options. Option 1 would pay $2,300 at the end of 3 years, Option 2 offers to pay you $1,950 today. You can earn 3.5% on similar investments. Which option should you take? A. Option 1 2 300 3yrr 3.5.1. B. Option 2 / C. It does not matter, they are equal Use the following project information data for questions 15-21. Project Project Year - A B 1 $ 600 $ 100 2 $ 500 $ 300 400 $ 800 4 $ 100 $ 800 100 2 A looo SOD 400 100 15 Assume each project requires an initial investment of $2.000 Using the payback method, which project should the company select? AD2 Q Project 00 100 100 3 Project 100 1100 16 the investment cost increased to $1.500, which project is preferable? B $ 100 100 SUO 800 100 Soo 100 de 1000 SU 2000 P 1952.748252.3 Project A Y A 4 B 4 3. Project 3 400 LELO 60 1200 4 10 1600 100 17 The company has a cost of capital discount rate of . What is the net present value of Project A the initial investment is $1.2007 yr OCF YKS/. AS (147.25) 1 00 952385714E BS 194.932 So 11.05 @ s .907029 = 453.SIS 252.75 3 DO 11.05 363838 345.535 452.75 4 15 .822703-82.270 E $ 59493 Li 2003 18 The company has a cost of capital discount rate of what is the net present value of Project if the initial investment is $1,600? yr OCFKS. AS 252.75 1 1/1.05 3.95238 (0) 95.238 $ 100 194.93 $ 2 300 1/1.0 5 .90 7024 594.93 272.1087 D 3 171.05 .863838691.0704 $ BDO 79493 1/1.os"..6227036 57.1624 E $ 2.652.75 5 100 1/1.055 .783527 7 8.3527 19 Based on the above two NPV answers, which is the superior project? CIUDD) Project A 8. Projects - PV 800 1794.9322 94.9912 20 Project is always superior to Project A using NPV If the investment is the same A True False 21 Based on the cash flows above, the internal rate of return of the project, A is less than 5.0% 8. is greater than 5.0% C is essentially 5.0% D. Cannot be determined based on the information provided