Case# 2 Assume that you are nearing graduation and have applied for a job with a local bank. As part of the banks evaluation process, you have been asked to take an examination that covers several financial analysis techniques. The first section of the test addresses discounted cash flow analysis. See how you would do by answering the following questions.

a. If Waris just got retirement. His company pension plan will pay him $2000 at the end of each year for the next 15 years. He asks if he can receive the entire balance of his pension account today, so that he can merge this with other investments. How much money should his company give him today? The interest rate is 5%

b. If Ab Waris deposited $500 at the end of each year for 12 years into his savings account. The bank charges 4% interest compounded monthly. What will the balance be after 12 years?

b. Ghafoor & Sons wishes to borrow $10,000 for three years. A group of individuals agrees to lend him this amount if he contracts to pay them $16,000 at the end of the three years. What is the implicit compound annual interest rate implied by this contract (to the nearest whole percent)?

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