Question 1:

Assume the annual discount rate is 6%.

What is the present value of $2,500 that will be received on this day in the year 2034?

Note: You do not need to worry about an extra day's worth of discounting or anything unusual.

Question 2:

A company offers to advance you money for a small fee paid later. For every $500 of cash advanced, the company will charge a fee of $8two weekslater. The company will allow you to roll this fee into a new cash advance under the same terms.

What is theeffective annual rateimplied by this offer? Assume that there are 52 weeks in a year.

Question 3:

Note:Please pay close attention to the exact wording. This is not a trick question, but the wording is important.

(1+ g) The formula gives the present value of an annuity with T (1 + 7 ) cash flows that... Check all that apply: O ...has cash flows which arrive at evenly spaced intervals. O ...has a growth rate g changes from period to period. J ...has cash flows that grow at a constant rate. O ...has a cash flow C that arrives today