3- How long does it take to save $70,000 if you deposit $8,000 end of each year in an account paying 8% annual interest rate? *

a) 6.89 years

b) 8.46 years

c) 11.4 years

d) 9.52 years

e) None of the above

4- Suppose that you are interested in a project A that will provide you with equal end of year cash flows of $3,200 annually for 13 years. The cost of purchasing equipment necessary for this project is $23,000. What is the rate of return of this project? *

a) 11%

b) 7.8%

c) 9.3%

d) 9.77%

e) None of the above

5- If you are about to choose between project A in the above problem and another equally risky project which will give a yearly return of 12%. Which project would you choose? Note that both projects A and B are mutually exclusive. *

a) Project A

b) Project B

c) Both projects

d) Neither A nor B

e) Missing Information