For the following mixed stream of cash flows, determine the future value at the end of the final year if deposits are made at the beginning of each year into an account paying annual interest of 15%, assuming no withdrawals are made during the period.

Year

2

3

Cash Flow Stream

13,000

8,800

6,000

Year

I

2

3

Future Value ($) =

Cash Flow Stream

13,000

8,800

6,000

(Round to the nearest cent.)

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Find the present value of the following mixed stream of cash flows using a discount rate of 11%. Assume the cash flows are received at the end of each year.

Year

2

3

Year

2

3

Cash Flow Stream

3,000

4,000

6,000

Cash Flow Stream

3,000

4,000

6,000

Present Value ($) =

(Round to the nearest cent.)

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Today you invested $24,900 in an investment that pays 9% and will mature in 5 years. Once the investment matures, you will reinvest your funds for another 6 years in another investment that pays 10%. What will be the value of your investment after 11 years?

(Choose the best response .)

OA.	$82,423.61
OB.	$113,827.43
OC.	$67,871.58
OD. OE.	$81,378.02 None of the other answers

4. If the present value of a perpetual income stream is increasing, the discount rate must be:

OA. Increasing

0B. Decreasing

oc. Changing unpredictably

0D. Keeping pace with inflation

5. $1,200 is deposited today into an account paying 6% interest compounded semiannually. How much interest will have been earned after 25 years?

OA.	$5,260.69
OB.	$ 1,3 12.53
0C.	$20,904.19
OD.	$4,060.69
OE.	$3,950.24

6. $1,200 is received at the beginning of year I , $2,200 is received at the beginning of year 2, and

$3,300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent ,

their combined future value at the end of year 3 is:

QA.	$7,504
Q B.	$8,141
QC.	$17,000
Q D.	$6,700
Q E.	$12,510

7. $100 is received at the beginning of year I,$200 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year three is: (Round to the nearest whole dollar)

QA.	$672
Q B.	$536
QC.	$364
Q D.	$427
Q E.	$336

If a US Saving bond can be purchased for $29.50 and has a maturity value at the end of 25 years of$100, what is the annual rate of return on the bond?

QA. 7 percent Q B. 8 percent QC. 6 percent Q D. 4 percent Q E. 5 percent

9. Shylock Bank offers a savings account with a nominal rate of 9% and quarterly compounding.

What is the effective rate of the account?

QA. 8.63%

Q B. 9.31%

QC. 9.20%

Q D. 9.42%

Q E. 9.00%

10. The future value of a dollar ----as the interest rate increases and. _ the farther in the future an initial deposit is to be received .

QA. decreases ; increases

Q B.

.

mcr

eases ; .

mcrea

ses

QC. increases; decreases

0D. decreases ; decreases