Q1 Calculating Present Values [LO2]Imprudential plc has an unfunded pension liability of 800 million that must be paid in 20 years. To assess the value of the firms equity, financial analysts want to discount this liability back to the present. if the relevant discount rate is 7 per cent, what is the present value of this liability?

Q2Calculating Interest Rates and Future Values [LO1, LO3]In 1968 prize money for the Wimbledon Tennis Championships was first awarded. The winner of the mens singles was 2,000 and for the ladies singles it was 750. In 2009 both winners received 850,000. What was the percentage increase per year in the winners cheque for men and women over this period? If the winners prize increases at the same rate, what will the mens and ladies singles tournament winners receive in 2040?

Q3Calculating Rates of Return [LO3]Consider again the security issue by Spanish Word Ltd that in return for receiving 24,099 today from investors, they will pay back 100,000 in 30 years.

(a) Based on the 24,099 price, what rate was Spanish Word paying to borrow money?

(b) Suppose that in 2020 this securitys price is 38,260. If an investor had purchased it for 24,099 in 2014 and sold it in 2020, what annual rate of return would she have earned?