Part I. Multiple Choice Questions (5 points each) of year one. What is the present value of these cash flows today if the interest rate is 5 percent? 1. Lucas will receive $6,800, $8,700, and $12,500 each year starting at the end A. $17,319 B. $18,531 C. $24,158 D. $25,165 Your grandmother is gifting you $100 a month for four years while you attend college to earn your bachelor's degree. At a 5.5 percent discount rate, what are these payments worth to you on the day you enter college? A. $4,201.16 B. $4,299.88 C. $4,509.19 D. $4,608.87 2. You buy an annuity that will pay you $24,000 a year for 25 years. The payments are paid on the first day of each year. What is the value of this annuity today if the discount rate is 8.5 percent? A. $241,309 B. $245,621 C. $251,409 D. $266,498 3 4 Alexa plans on saving $3,000 a year and expects to earn an annual rate of 10.25 percent. How much will she have in her account at the end of 45 years? A. $1,838,369 B. $2,211,407 C. $2,333,572 D. $2,508,316 5. You are borrowing $17,800 to buy a car. The terms of the loan call for monthly payments for 5 years at 8.6 percent interest. What is the amount of each payment? A. $291.40 B. $301.12 C. $366.05 D. $452.88