1)Imprudential, Inc., has an unfunded pension liability of $581 million that must be paid in 20 years. To assess the value of the firms stock, financial analysts want to discount this liability back to the present.

If the relevant discount rate is 7.4 percent, what is the present value of this liability?

2)You have just received notification that you have won the $3 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming youre around to collect), 75 years from now.

What is the present value of your windfall if the appropriate discount rate is 10 percent?

3)Your coin collection contains 41 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2051, assuming they appreciate at an annual rate of 6 percent?

4)In 1895, the first Putting Green Championship was held. The winners prize money was $200. In 2014, the winners check was $1,400,000.

What was the percentage increase per year in the winners check over this period?

If the winners prize increases at the same rate, what will it be in 2035?

5)Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, an auction house sold a sculpture at auction for a price of $10,391,500. Unfortunately for the previous owner, he had purchased it in 2000 at a price of $12,537,500.

What was his annual rate of return on this sculpture?