You are planning to put $2,000 in the bank at the end of each year for the next six years in hopes that you will have enough money for a down payment on a house. If you are investing at an annual interest rate of 7%, how much money will you have at the end of six years-rounded to the nearest whole dollar? $17,168 $11,446 $15,308 $14,307 You've decided to deposit your money in the bank at the beginning of the year instead of the end of the year, but now you are making payments of $2,000 at an annual interest rate of 7%. How much money will you have available at the end of six years-rounded to the nearest whole dollar? $10,716 $15,308 $21,431 $14,307 What is the value today of a $158,000 cash flow expected to be received twelve years from now based on an annual interest rate of 7%? $355,846 $108,739 $70,154 $87,693 Your broker called earlier today and offered you the opportunity to invest in a security. As a friend, she suggested that you compare the current, or present value, cost of the security and the discounted value of its expected future cash flows before deciding whether or not to invest. The decision rule that should be used to decide whether or not to invest should be: Everything else being equal, you should invest if the current cost of the security is greater than the present value of the security's expected future cash flows. Everything else being equal, you should invest if the discounted value of the security's expected future cash is greater than or equal to the current cost of the security Everything else being equal, you should invest if the present value of the security's expected future cash flows is less than the current cost of the security Now that you've thought about the decision rule that should be applied to your decision, apply it to the following security offered by your broker: Jing Associates, LLC, a large law firm in Denver, is building a new office complex. To pay for the construction, Jing Associates is selling a security that will pay the investor the lump sum of $38,600 in nine years. The current market price of the security is $16,429. Assuming that you can earn an annual return of 8.25% on your next most attractive investment, how much is the security worth to you today? $19,858 $31,205 $18,912 From strictly a financial perspective, should you invest in the Jing security? Yes No Why or why not? Because the discounted value of the security's future cash flows is greater than the cost of the security. Because the cost of the security is greater than the discounted value of the security's future cash flows. Darnell needs a loan and is speaking to several lending agencies about their interest rates and loan terms. He particularly likes his local bank because he is being offered a nominal rate of 8.00%. However, since the bank is compounding its interest semiannually, the loan will impose an effective interest rate of on his loan Suppose you decide to deposit $16,000 into a savings account that pays a nominal rate of 10.40%, but interest is compounded daily. Based on a 365- day year, how much would you have in your account after six months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365 ) $16,517 02 $16,685.56 $16,854.10 $17,191.18