WEEK THREE

1. (Present value of a complex stream) Don Draper has signed a contract that will pay him $ 50,000 at the beginning of each year for the next 7 years, plus an additional $ 100,000 at the end of year 7. If 12 percent is the appropriate discount rate, what is the present value of this contract?

a. What is the present value of $50,000 at the beginning of each year for the next 7 years if the discount rate is 12 percent? (Round to the nearest cent.) Answer:

2. (Solving for n with nonannual periods) About how many years would it take for your investment to grow four fold if it were invested at an APR of 16 percent compounded semiannually?

If you invest $1 at an APR of 16 percent compounded semiannually, about how many years would it take for your investment to grow four fold to $4? Years (Round to the nearest whole number.) Answer:

PLEASE ANSWER EACH QUESTION FULLY AND CORRECTLY!!!