Please identify what type of problem you are solving for before you find the answer (e.g., the future value of a lump sum, the present value of an ordinary annuity, the future value of an annuity due, and the payment on a future value of an ordinary annuity).

1. What is the value of $7,000 invested for twelve years at six percent annual interest?

2. What is the value of $150 you expect to receive in seven years at six percent annual interest?

3. What is the value of $350 invested for five years at nine percent annual interest?

4. What is the value of $250 you expect to receive in ten years at eight percent annual interest?

5. Today, Richardson Inc., an art gallery on the West Side, purchased a rare painting for $70,000. They expect the artwork to increase in value by 15 percent annually over the next five years. What will the artwork be worth at the end of five years if their predictions come true?

6. Revoltin' Inc. manufactures a caffeine drink designed to keep students up all night. They would like to introduce a new product called Half-Ass Revoltin' that would keep students up only half the night. The firm put $15,000 aside at the beginning of each year. They have done this for the last three years in a portfolio of securities that have been paying ten percent a year. The firm needs to have $65,000 to finance the new product line. (a) What will be the value of its investment after three years? (b) How much more (less) does the firm need? (c) How much should it have set aside each year?

7. Allegro, Inc. has a defined-benefit pension plan that is underfunded. To try and catch up with its liabilities, Allegro invested $100,000 into a high-risk junk bond fund that, in previous years, had earned as much as 19 percent mutual annually. If the firm's plan works and the fund continues to make an annual rate of 19 percent over the next ten years, how much will Allegro have added to their pension fund holdings?

8. The owners of Rottweiler Rotors, a custom motorcycle shop, want to have $850,000 at the end of 20 years to supplement their pension income. They are currently investing $10,000 at the end of each year, earning 8.2 percent compounded annually. (a) How much will Rottweiler Rotors have at the end of their investment horizon? (b) How much more (less) does the firm need? (c) How much should it have set aside each year?

9. Penguin Plastics has been doing a booming business. They would like to expand in the next three years. The owners estimate they will need $47,000 to build on to the firm's existing space. What amount of money should it set aside today, assuming the firm can earn five percent on their investments?

10. Sheldon Cooper's Death Ray Machine Shop, Inc. developed the Death Ray paintball gun. The Death Ray shoots twice the usual distance as regular paintball guns and has been all the rage with the paintball crowd. To meet the demand, they need to double production. The company has set aside $18,000 at the beginning of each year to get the $75,000 they will need in three years. (a) If Sheldon's company can earn 6% on their invested dollars, how much will it have in three years? (b) How much more (less) does the firm need? (c) How much should it have set aside each year?

11. Bateman's Clothier, a specialty men's costume manufacturer, invested $12,000 in a corporate bond mutual fund that offers a 7.7 percent annual return. The firm would like to have $20,000 at the end of nine years for an expansion project. (a) How much will Bateman's Clothier have at the end of its investment horizon? (b) How much more (less) does the firm need? (c) How much should it have invested to reach its goal?

12. Retro-onics Corporation needs $400,000 in five years. They have invested $120,000 in stocks paying 15.5 percent annually. Will Roetronics have enough funds to meet its financial goal? (a) How much will Retro-onics have at the end of its investment horizon? (b) How much more (less) does the firm need? (c) How much should it have invested to reach its goal?

13. Pesto Publishing plans to expand its operations to the West Coast in ten years. Today their CFO contributed $120,000 toward their goal of $450,000. They expect their portfolio to earn 12 percent annually. (a) How much will Pesto Publishing have at the end of its investment horizon? (b) How much more (less) does the firm need? (c) How much should it have invested to reach its goal?

14. Medical Surplus Supply will need $200,000 in two years to build up its business. The firm can invest in a new mutual fund that promises low risk and returns of seven percent annually. How much should Medical Surplus Supply invest if the firm wants to meet its financial goal?

15. Your grandmother invested $7,000 on the day you were born in an account that pays six percent annual interest. How much will you have when you are twelve years old?

16. Coffee is out. Tea is in vogue. Given this information, Mr. Coffee has invested in a new product line called Ms. Tea. The cash flows the firm expects to receive from the Ms. Tea project are $500,000 at the end of each of the next eight years. (a) What is the value of that project today if the firm's opportunity cost is seven percent? (b) Assume (because we can) that the makers of Ms. Tea could invest the present value of the project's cash flows (which you calculated in part a) at seven percent. What would be the value of this cash flow at the end of the project's life?

17. Chili Peppers, Inc. makes a swoon-proof hot sauce. The firm wants to take the sauce national in five years, but the cost for new production facilities and a national advertising campaign will be close to $800,000. If the firm can invest their money at seven percent annual interest, how much should it invest today to have the $800,000 it needs in five years?

18. Papyrus Prints, a maker of specialty wrapping paper, needs to have $11,000 available at the end of each of the next five years to keep its current project going. If the firm can earn 6.5 percent annual compounding on its invested dollars, how much will it have to set aside today to ensure it will have the level of cash inflows it will need?