Question 1

How do ordinary annuity, an annuity due, and a perpetuity differ?

Question 2

Corona Ltd is expecting cash flows of $13,000, $11,500, $12,750 and $9,635 over the next 4 years. What is the present value of these cash flows if the appropriate discount rate is 8%?

Question 3

Mr. Yassin is planning to save for a Europe trip in 3 years. He will need $10,000 when he is ready to make the trip. He plans to invest the same amount at the end of each of the next 3 years in an account paying 6%. What is the amount he will have to save every year to reach his goal of $10,000 in 3 years?

Question 4

Dynamo Ltd is expecting annual payments of $34,225 for the next 7 years from a customer. What is the present value of this annuity if the discount rate is 8.5%? Corporate Finance (FIN3218) - BACFIN

Question 5

Cecelia is a sales executive at a Brisbane company. She is 25 years old and plans to invest $3000 every year in a retirement savings account, beginning at the end of this year until she turns 65 years old. If the retirement savings investment will earn 9.75 per cent annually, how much will she have in 40 years when she turns 65 years old?

Question 6

Raj Krishnan bought a Honda Accord for a price of $17,345. He deposited $6000 and financed the rest through the dealer at an APR of 4.9 per cent for 4 years. What is the effective annual rate (EAR) if payments are made monthly?

Question 7

Your grandfather is retiring at the end of next year. He would like to ensure that he, and after he dies, his heirs receive a payment of $10,000 a year forever, starting when he retires. If he can invest at 6.5 per cent, how much does need to invest to receive the desired cash flow?