How much do you have to deposit today so that beginning 11 years from now you can withdraw $10,000 for the next 5 years (periods 11 through 15) plus an additional $20,000 in that last year (period 15)? Assume interest rate to be 7.5%. Ans.:$________.

A. 26,930

B. 31,867

C. 31,876

D. 26,390

2. Don Draper has signed a contract that will pay him $100,000 at the beginning of each year for the next 6 years, plus an additional $200,000 at the end of year 6. If 5% is the discount rate, what is the present value of Don's contract? Ans.: ________.

• A. 682,191
• B. 690,696
• C. 628,191
• D. 701,123

3. You see the following quote in an invoice: 2/10, net 30. What is the effective annual rate (EAR) for giving up the cash discount? (Hint: use 365-day convention) Ans.: ________%

• A. 44.59
• B. 40.75
• C. 36.50
• D. 45.75

4. You plan to save $1m for a water-front beach house in Virginia Beach. You employment contract will pay you an after-tax $200k when you retire in 15 years. You plan to use that sum for the beach house. How much must you save monthly if the savings account's return is at 4% per year? Ans.:________.

• A. 3,215
• B. 3,251
• C. 3,240
• D. 3,204