2. Your brother, who is 6 years old, just received a trust fund that will be worth $21,000 when he is 21 years old. If the fund earns 0.11 interest compounded annually, what is the value of the fund today? Round to two decimal places.

3. If you were to borrow $9,300 over five years at 0.10 compounded monthly, what would be your monthly payment? Round to two decimal places

4. A dollar to be received in the future is worth more than a dollar in hand today?

A. True

B. False

5. Use the following information to calculate your company's expected return

State Probability Return

Boom 20% 0.34

Normal 60% 0.10

Recession 20% -0.16

Round to two decimal places

ANSWER:

6. You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella Co., and 30 percent in Edward Resources. What is the expected return of your portfolio if Jacob, Bella and Edward have expected returns of 0.02, 0.14 and 0.17, respectfully? Round to two decimal places.

7. A project has the following cash flows:

0 1 2 3

($500) $140.00 $200 $290.00

What is the project's NPV if the interest rate is 6%. Round to two decimal places.

8. Christopher Electronics brought new machinery for $5,150,000 million. This is expected to result in additional cash flows of $1,225,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years. Round to two decimal places.