Chapter 3: Show your work, that means to show the inputs used on your financial calcula the equation that you use (for #8). 1. Sue now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? be 2. How much would $5,000 paid to you in 25 years be worth today if the discount rate were 5.5%? We assume annual compounding unless told differently. fil 3. Ten years ago, Lucas Inc. earned $0.50 per share. Its earnings this year were $2.20. What was the growth rate in earnings per share (EPS) over the 10-year period? Hint: You are given the PV and FV here, the growth rate in EPS is analogous to the annual interest rate. 4. Future value of an annuity: You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now? 5. Let's go back to Sue, who now has $12.500 to invest. How much would she have after 8 years if she leaves it invested at 8.5% with daily compounding? 6. How much would $5,000 paid to you in 25 years be worth today if the discount rate were 5.50% annually (APR), and compounding is weekly? tour con 7. Calculate the present value of the following stream of cash flows (received at the end of each year), assume the appropriate rate of return is 8%. Year Cash flow 1 $5,000 ther 2 $6,000 3 $7,000 4 $8,000 8. Calculate the present value of a perpetuity which pays $2500 each year, assuming that the appropriate rate of return (discount rate) is 5.5%