Problem 1 In 1895, the first U.S. Open Golf Championship was held. The winners prize money was $150. In 2007, the winners check was $1,260,000. What was the percentage increase per year in the winners check over this period? If the winners prize increases at the same rate, what will it be in 2040?

Problem 2 Imprudential, Inc., has an unfunded pension liability of $600 million that must be paid in 20 years. To assess the value of the firms stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 7%, what is the present value of this liability?

Problem 3 The Rams 1st round draft pick signed a deal for $30M to be paid over 4 years. The payout schedule will be $5M at the end of year 1, $5M at the end of year 2, $10M at the end of year 3 and $10M at the end of year 4. Assuming a discount rate of 10% is this package worth $30M? What is it worth?

Problem 4 (hint Annuity Present Value) You are looking at an investment that pays you 15,000 per year for the next 5 years. You require a 15% return. What is the most you would pay for this investment?

Problem 5 (hint Annuity Future Value) You plan to retire in 5 years and need an extra $100,000 in your retirement account. Assume your rate of return is 8% - what do you need to put away annually for the next 5 years to achieve this goal of $100,000.