Practice questions for FIN 701 Dr Vines LSUS

1.The fair rate is 8%. What is 100 per year, forever, worth now? (1250)

2.What is the same 100 per year worth if it only lasts for 15 years? (855.948)

3.What if the 100 was the past cash flow and we expect it to grow at 5% forever? (3500)

4.What if we only get the 100 once at the end of this year? (92.59)

5.What if it we get it once, at the end of ten years? (46.319)

6.If we get the 100 each year for ten years and invest each payment in an account that earns 8% how much will be there at the end? (1448.66)

7.Put 1200 in an account earning 6%. How long until it grows to 2000? (8.77 years)

8.Buy a new calculator for 400. Leave it in the original wrapping for six years. Sell it to a finance nerd for 600 at that point. What is your rate of return? (6.99%)

9.Castle Black Camping is twice as risky as the average stock. The market should earn 11% and the risk free rate is 2%. What is a fair return for CBC? (20%)

10.Harlan County Safety Co. has a beta of 1.2. Form a portfolio that is half HCSC and half CBC (from number 9). What is a fair return? (16.4%)