Single Sums:

1. What is the present value of $40,000 received 4 years from now if the relevant discount rate is 2 percent?

2. What yield is needed for $6,000 today to be worth $12,000 ten years from today?

3. How many years will it take for $100,000 today to be worth $200,000 if the investment is expected to yield 6 percent?

4. What is the future value 30 years from now of $5,500 invested today with an expected return of 7 percent?

Annuities:

5. What is the value today of a payment stream of $350/month paid for the next 5 years (60 months) with the first payment a month from now if the relevant discount rate is 4 percent?

6. What is the future value of a payment stream of $5,000/year invested in a Traditional IRA at an expected return of 8 percent for 30 years? The first investment is made at the end of the year.

7. What is the future value of the payment stream in question 6 if the payment is made at the beginning of each year.

8. What is the present value of a payment stream of $10,000 paid semiannually for four years if the relevant discount rate is 2 percent? The first payment is six months from now.

Given the following cash flow stream for an investment by a firm, and a discount rate of 8 percent, what is the:

9. Net Present Value (NPV)

10. Internal Rate of Return (IRR)

11. Modified Internal Rate of Return (MIRR) when the reinvestment rate is 6 percent.

12. Under which evaluation method(s) will the firm accept the project?

Year |
Cash Flow |

0 |
$ (250,000) |

1 |
$ 30,000 |

2 |
$ 40,000 |

3 |
$ 50,000 |

4 |
$ 60,000 |

5 |
$ 50,000 |

6 |
$ 40,000 |

7 |
$ 40,000 |

8 |
$ 30,000 |

9 |
$ 25,000 |

10 |
$ 15,000 |

Effective Yields, Nominal Yields & Annual Percentage Rates:

13. What is the effective annual yield on a CD that pays a nominal rate of 2 percent but has interest compounded:

a. daily

b. weekly

c. monthly

d. quarterly

e. semiannually

14. What is the nominal rate of a CD with an effective rate of 3.12% with interest compounding daily?

15. What is the APR of a credit card with a 20 day payment cycle and a periodic rate of 1%?