Questions:

1. At what annual interest rate, compounded annually, would $510 have to be invested for it to grow to $1,978.93 in 10 years?
2. What is the present value of $500 to be received 10 years from now discounted back to the present at 12 percent?
3. Kirk Van Houten, who has been married for 21 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $12,000 in 9 years. Kirk currently has $4,403 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring?
4. Assume these investments sell for $2,073 in return for which you receive $4,000 in 26 years. What is the rate of return investors earn on this investment if they buy it for $2,073?
5. Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $330,000 Rolls-Royce Phantom. Jack currently has $65,060 that he may invest. He has found a mutual fund with an expected annual return of 4 percent in which he will place the money. How long will it take Jack to win Jill's hand in marriage? Ignore taxes and inflation.
6. You lend a friend $10,000, for which your friend will repay you $27,027 at the end of 5 years. What interest rate are you charging your "friend"?The interest rate you are charging your friend on the loan is?
7. You are offered $80,000 today or $360,000 in 15 years. Assuming that you can earn 12 percent on your money, which should you choose? If you are offered $360,000 in 15 years and you can earn 12 percent on your money, what is the present value of $360,000?
8. Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $6,000,000 and would generate annual net cash inflows of $1,200,000 per year for 7 years. Calculate the project's NPV using a discount rate of 8 percent. If the discount rate is 8 percent, then the project's NPV is?
9. Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $10,500,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $2,000,000 per year for each of the next 9 years. In year 9 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $0.9 million. Thus, in year 9 the investment cash inflow totals $2,900,000. Calculate the project's NPV using a discount rate of 10 percent. If the discount rate is 10 percent, then the project's NPV is?
10. Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $95,000 and will generate net cash inflows of $19,000 per year for 9 years.

a- What is the project's NPV using a discount rate of 7 percent? Should the project be accepted? Why or why not?

b-What is the project's NPV using a discount rate of 17 percent? Should the project be accepted? Why or why not?

c-What is this project's internal rate of return? Should the project be accepted? Why or why not?