What is the present value of $40,000 received 4 years from now if the

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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.

 

NPV/IRR/MIRR:

 

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%?

 

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