Question
Question 1 You are expecting a project to produce the following cash flows for years 1 through 4 respectively: $1,705, $1,691, $1,882, $1,407. If the
Question 1
You are expecting a project to produce the following cash flows for years 1 through 4 respectively: $1,705, $1,691, $1,882, $1,407. If the appropriate discount rate is 12 percent, how much would you be willing to pay for it today?
10 points
Question 2
Your parents promise to give you $94 a month for 3 years, starting at the end of this month, to help you out. At a 8.6 percent APR discount rate, what are these payments worth to you right now?
10 points
Question 3
Todd is able to pay $164 a month for 7 years for a car. If the interest rate is 6.76 percent APR, how much can Todd afford to borrow to buy a car?
10 points
Question 4
What is the future value of $623 a year for 9 years at a 7.17 percent rate of interest?
10 points
Question 5
You borrow $6,055 to buy a car. The terms of the loan call for monthly payments for 7 years at a 9.12 percent APR. What is the amount of each payment?
10 points
Question 6
The Great Giant Corp. has a management contract with its newly hired president. The contract requires a lump sum payment of $31,712,635 to be paid to the president upon the completion of her first 5 years of service. The company wants to set aside an equal amount of funds at the end of each year to cover this anticipated cash outflow. The company can earn 5.63 percent on these funds. How much must the company set aside each year for this purpose?
10 points
Question 7
The Good Life Insurance Co. wants to sell you an annuity which will pay you $571 per quarter for 22 years. You want to earn a minimum rate of return of 7.29 percent APR. What is the most you are willing to pay as a lump sum today to buy this annuity?
10 points
Question 8
Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $7,608, $8,325, and $14,289 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a 8.28 percent rate of return is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
10 points
Question 9
One year ago, the Jenkins Family Fun Center deposited $6,780 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $5,559 to this account. They plan on making a final deposit of $7,923 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 8 percent rate of return?
10 points
Question 10
If you put up $47,309 today in exchange for a 11.9 percent, 14 year annuity, what will the annual cash flow be?
10 points
Question 11
You are expecting to receive $300 at the end of each year in years 3, 4, and 5, and then 500 each year at the end of each year in years 10 through 25, inclusive. If the appropriate discount rate is 5.5 percent, for how much would you be able to sell your claim to these cash flows today?
10 points
Question 12
You are paying an effective annual rate of 13.98 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on your account? (Enter rate in percents, not in decimals.)
10 points
Question 13
What is the future value of a lump sum of $1,625, in 24 years, assuming an interest rate of 7.3 percent APR compounded semiannually?
10 points
Question 14
Assume you deposit $7,606 at the end of each year into an account paying 10.11 percent interest. How much money will you have in the account in 16 years?
10 points
Question 15
Curlys Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $21,496 per year forever. Suppose Curlys told you the policy costs $592,669. At what interest rate would this be a fair deal? (Enter interest rate in percents, not decimals.)
10 points
Question 16
You just paid $339,217 for a policy that will pay you and your heirs $11,528 a year forever. What rate of return are you earning on this policy? (Enter rate in percents, not in decimals.)
10 points
Question 17
Annuity X promises to pay you $2,000 a year for 25 years in exchange for $19,000 today. Annuity Y has the same riskiness, and thus the same discount rate, as Annuity X, and promises to pay you $8,795 per year for 30 years. Find the fair market value of Annuity Y.
10 points
Question 18
You expect to receive 1000 bucks every year at the end of each year, starting in year 7 and ending in year 21. If you expect the rate of return is 10.2 percent, and you invest all your cash flows at the going rate as soon as you receive them, how much money will you have at the end of year 25?
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