ANSWER QUESTIONS 7-12

7. What is the present value of $250 received at the beginning of each year for 21 years? Assume that the first payment is received today. Use a discount rate of 12%

8. What is the future value of semi-annual payments of $6,500 for eight years at 12 percent?

9. You are considering an investment which would entail $5,000 payments each year for 20 years. The investment will pay 7 percent interest. How much will this investment be worth at the end of the 20 years?

10. Kelly starting setting aside funds six years ago to buy some new equipment for her firm. She has saved$2,000 each quarter and earned an average rate of return of 7.5 percent. How much money does she currently have saved for this purpose?

11. Today, you are purchasing a $85,000 20-year car loan at 6 percent. You will pay annually at the end of each year. What is the amount of each payment?

12. You just won a lottery that will pay you $2,500 a year for twenty years. You will receive your first payment today. If you can earn 8 percent on your money, what are your winnings worth to you today?(Note that since you will receive your first payment today, it is an annuity due problem).