7. The preferred stock of General Motors pays a dividend of $2 every quarter. The appropriate discount rate is 6% per quarter. a. What is the present value of all dividends? b. If you expect to receive the $2 every quarter for exactly 7 years and nothing thereafter, what is the present value of those cash flows? 8. You took out a loan to buy a new car. The monthly interest rate on the loan is 1 5% You have to pay $280 every month for 60 months. a. What is the present value of the cash flows if it's an ordinary annuity? b. What is the future value of the cash flows if it's an ordinary annuity? Time value of money Page 3 of 4 c. What is the present value of the cash flows if it's an annuity due? d. What is the future value of the cash flows if it's an annuity due? You took out some students loan in college and now owe $10.000. You consolidated the loans into one amortizing loan, which has an annual interest rate of 7% (APR. 9. a. If you make monthly payments of $200, how many months will it take to pay of the loan? Fractional values are acceptable 10. You want to borrow $500,000 from your bank to buy a business. The loan has an annual interest rate now), after which of 8% and calls for equal annual payments over 10 years (starting one year from the loan is paid back in full. a. What is the annual payment you have to make? You took out a mortgage for $500,000. You need to pay $4.219 every month for 15 years. a. What is the monthly interest rate? 11. You just turned 22 years old and want to retire when you turn 65. You plan to put $4,700 every year into a ROTH IRA, a retirement account from which you can withdraw money after retirement without having to pay any taxes. You expect to earn a return of 8% on your investments every year a. How much money can you expect to have at age 65 if you make your first deposit now and your 12. last one on the day you turn 64? b. How much money can you expect to have at age 65 if you make your first deposit 10 years from now (at age 32) and your last one on the day you turn 64? 13. You expect to receive two cash flows: $26,000 paid in 5 years and $39,000 paid in 10 years. The annual interest rate is 2%. a. What is the future value of the combined cash flows in 15 years