You are expecting a project to produce the following cash flows for years 1 through 4 respectively: $1,551, $1,519, $1,048, $1,234. If the appropriate discount rate is 8 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 6.02 percent APR discount rate, what are these payments worth to you right now?

10 points

QUESTION 3

Todd is able to pay $119 a month for 5 years for a car. If the interest rate is 4.68 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 $7,105 to buy a car. The terms of the loan call for monthly payments for 6 years at a 9.72 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 $35,473,273 to be paid to the president upon the completion of her first 12 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 9.17 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 $781 per quarter for 24 years. You want to earn a minimum rate of return of 7.62 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 $7,612, $6,613, and $14,583 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a 5.95 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 $5,971 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $9,558 to this account. They plan on making a final deposit of $6,416 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 6 percent rate of return?

10 points

QUESTION 10

If you put up $43,533 today in exchange for a 9.7 percent, 11 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 6.9 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 12.93 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 $1,335, in 17 years, assuming an interest rate of 8.8 percent APR compounded semiannually?

10 points

QUESTION 14

Assume you deposit $9,420 at the end of each year into an account paying 13.68 percent interest. How much money will you have in the account in 17 years?

10 points

QUESTION 15

You just paid $385,345 for a policy that will pay you and your heirs $10,503 a year forever. What rate of return are you earning on this policy? (Enter rate in percents, not in decimals.)

10 points

QUESTION 16

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 $6,339 per year for 28 years. Find the fair market value of Annuity Y.

10 points

QUESTION 17

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 7.5 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?