Question 1
Assume interest rate of 4%. Suppose that
you receive $88,474 at the end of each year for 4 years. Suppose that this cash
flow starts at the end of the fourth year. Compute the present value.
Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.
Question 2
How many years it will take you to double
your money if you can earn 13% each year, given that compounding is quarterly?
Note: Do not write “years” in your answer.
Question 3
The ABC Company is considering a new
project which will require an initial cash investment of $10,415. The projected
cash flows for years 1 through 4 are $8,529, $6,611, $9,366, and $4,876,
respectively. If the appropriate discount rate is 10%, compute the NPV of the
project.
Enter your answer rounded off to two
decimal points. Do not enter $ in the answer .
Question 4
Say, you deposit $3,302 in a bank for 17
years. What is the amount you will have in the bank at the end of 17 years if
interest of 5 % for first 7 years and interest of 7 % for the remaining years?
Note: Do not put $ sign in your answer.
Question 5
If the effective rate is 12%. What is the
nominal rate if compounding is daily. Do not enter the symbol % in your
answer. Simply enter the answer in percentages rounded off to two decimal
points.
Question 6
Assume interest rate of 9%. A company
receives cash flows of $928 at the end of year 5, $226 at the end of year 7,
and $592 at the end of year 10. Compute the future value of this cash flow
stream.
Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.
Question 7
Today, you are purchasing a $3,483 5-year
car loan at 12 percent. You will pay annually at the end of each year. What is
the amount of each payment?
Question 8
In order to buy a house, you take a loan of
100,000 at 7.5% for a period of 13 years. Compute the balance remaining at the
end of 5 years.
Do not enter the symbol $ in your answer.
Enter your answer as a positive number. Simply enter the answer rounded off to
two decimal points.
Question 9
If you put $700 in a savings account with a
10% nominal rate of interest compounded monthly, what will the investment be
worth in 21 months (round to the nearest dollar)?
a.
$827
b.
$833
c.
$828
d.
$1,176
e.
$770
Question 10
What is the future value of quarterly
payments of $504 for 7 years at 6 percent?
Question 11
The Perpetual Life Insurance Co is trying
to sell you an investment policy that will pay you and your heirs $13,124 per
year forever. Suppose the Perpetual Life Insurance Co. told you the policy
costs $192,923. At what interest rate would this be a fair deal? Just enter the
number in percentages up to 2 decimal points. Do not enter % in the answer box.
Question 12
Barrett Pharmaceuticals is considering a
drug project that costs $180,372 today and is expected to generate end-of-year
annual cash flows of $11,811, forever. At what discount rate would Barrett be
indifferent between accepting and rejecting the project?
Just enter the number in percentages
up to 2 decimal points. Do not enter % in the answer box.
Question 13
How many months it will take to grow your
money from $4,269 to $7,242 if you can earn an interest of 9% compounded
monthly? Note: Do not write “months” in your answer. Simply write the
number in the answer box.
Question 14
What should you be willing to pay in order
to receive $710 annually forever, if you require 6% per year on the investment?
Just enter the number up to 2 decimal
points. Do not enter $ in the answer box.
Question 15
Consider a 10-year loan with monthly
payments at 10%. If the loan amount is $250,000, compute the Interest paid
during the 6th year.
Enter your answer rounded off to two
decimal points. Do not enter $ in the answer box.
Question 16
How many years it will take to grow your
money from $4,133 to $9,600 if you can earn an interest of 12% compounded
quarterly? Note: Do not write “years” in your answer. Simply write
the number in the answer box.
Question 17
Kelly starting setting aside funds 9 years
ago to buy some new equipment for her firm. She has saved $7,579 each quarter
and earned an average rate of return of 5 percent. How much money does she
currently have saved for this purpose?
Question 18
How many years it will take you to
quadruple (means 4 times) your money if you can earn 10.46% each year? Note: Do
not write “years” in your answer. Simply write the number in the
answer box.
Question 19
What is the future value of $3,317 invested
for 14 years at 14% if interest is compounded quarterly? Note:Do not put $ sign
in your answer. Simply write the number in the answer box.
Question 20
If you can double your money in 18 years,
what is the implied annual rate of interest, given that compounded in
quarterly? Note: give your answer in percentages. Note: Do not put % sign in
your answer. Simply write the number in percentages in the answer box.
Question 21
How much do you need to invest today in
order to have $5,486 at the end of 11 years if you are sure to earn an interest
at the rate of 11%? Note: Do not put $ sign in your answer. Simply write the
number in the answer box.
Question 22
How many years it will take to grow your
money from $3,194 to $7,778 if you can earn an interest of 16% compounded
monthly? Note: Do not write “years” in your answer. Simply write the
number in the answer box.
Question 23
If you receive $274 at the end of each year
for the first three years and $956 at the end of each year for the next three
years. What is the present value? Assume interest rate is 7%.
Hint: This is an uneven cash flow problem.
Use the CF function and solve for NPV to get the answer.
Just enter the number up to 2 decimal
points. Do not enter $ in the answer box.
Question 24
Assume interest rate of 7%. A company
receives cash flows of $116,553 at the end of years 4, 5, 6, 7, and 8, and cash
flows of $296,739 at the end of year 10. Compute the future value of this cash
flow stream.
Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.
Question 25
How much do you need to invest today in
order to have $7,314 at the end of 9 years if you are sure to earn an interest
at the rate of 11%, if interest is compounded quarterly? Note: Do not put $
sign in your answer. Simply write the number in the answer box.
Question 26
What is the effective rate of 10%
compounded monthly?
Do not enter the symbol % in your answer.
Simply enter the answer in percentages rounded off to two decimal points.
Question 27
If you can triple your money in 28 years,
what is the implied rate of interest? Note: Do not put % sign in your answer.
Simply write the number in percentages in the answer box..
Question 28
What is the future value of $114 invested
for 6 years at 16% if interest is compounded semi-annually? Note: Do not put $
sign in your answer. Simply write the number in the answer box.
Question 29
The ABC Company is considering a new
project which will require an initial cash investment of $5,846. The project
will produce no cash flows for the first 5 years. The projected cash flows for
years 6 through 9 are $4,628, $5,400, $6,495, and $3,450, respectively. If the
appropriate discount rate is 9%, compute the NPV of the project.
Enter your answer rounded off to two
decimal points. Do not enter $ in the answer box.
Question 30
What is the future value of $2,466 for 9
years at 4 percent if interest is compounded semi-annually? Note: Do not enter
“$” in your answer. Simply write down the number that you get as your
answer.
Question 31
Gertrude Carter and Co. has an outstanding
loan that calls for equal annual payments of $14,903 over the 10-year life of
the loan. The original loan amount was $100,000 at an APR of 8 percent. How
much of the third payment is interest?
Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.
Question 32
What is the future value of $3,097 invested
for 22 years at 15% if interest is compounded semi-annually (twice a year)?
Note: Do not put $ sign in your answer. Simply write the number in the answer
box.
Question 33
Say, you deposit $2,056 in a bank for 19
years. What is the amount you will have in the bank at the end of 19 years if
interest of 6 % compounded monthly for first 7 years and interest of 7 %
compounded quarterly for the remaining years? Note: Do not put $ sign in your answer.
Simply write the number in the answer box.
Question 34
How much do you need to invest today in
order to have $9,946 at the end of 19 years if you are sure to earn an interest
at the rate of 7%, if interest is compounded monthly? Note: Do not put $ sign
in your answer. Simply write the number in the answer box.
Question 35
What is the future value of annual payments
of $2,947 for 15 years at 6 percent?
Question 36
If you can double your money in 17 years,
what is the implied annual rate of interest, given that compounded
semi-annually? Note: give your answer in percentages. Note: Do not put % sign
in your answer. Simply write the number in percentages in the answer box.
