Question

11- Assume the total cost of a college education will be $303,000 when your child enters college in 18 years. You presently have $54,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? (Enter answer on percent with two decimals, i.e. 32.16)

12- You have $24,000 you want to invest for the next 40 years. You are offered an investment plan that will pay you 7 percent per year for the next 20 years and 9 percent per year for the last 20 years. How much will you have at the end of the 40 years?

(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

# Years:

13-

Year

Cash Flow

1

1083

2

816

3

1267

4

616

Eulis Co. has identified an investment project with the cash flows shown in the table above. If the discount rate is 11 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to two decimals, i.e. 32.16)

14-

Year

Cash Flow

1

1730

2

1017

3

784

4

1488

Vegetable Corp.. has identified an investment project with the cash flows shown in the table above. If the discount rate is 12 percent, what is the future value of these cash flows in year 4? (Do not round intermediate calculations and round your answer to two decimals, i.e. 32.16)

Answer 1

Answer-11

Future value = $303000 (FV)

Present value =$54000 (PV)

Number of year= 18 years (t)

let the annual rate of interest be = r%

hence ,

=>

=>

=>

=>1+r = 1.1005602578901

=>r = 0.1005602578901 or 10.06%

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Answer-12

Future value =

here A= amount invested = $24000

i1= interest for first period = 7%

n1= first period = 20 year

i2= interest for 2nd period = 9%

n2= second period = 20 yr

hence Future value after 40 year= = $520495.2305

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Answer-13

Year	cash flow(A)	PVF@11% (1/(1.11)^n) (B)	PV of cash flow(A*B)
1	1083	0.90090090	975.67567568
2	816	0.81162243	662.28390553
3	1267	0.73119138	926.41948011
4	616	0.65873097	405.77828007
		Total NPV	2970.15734138

Hence total PV of the cash flow = 2970.16 (round off)

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Answer-14

Year	cash flow(A)	FV Factor@12% (B)	Formula	FV of cash flow(A*B)
1	1730	1.40492800	(1.12)^3	2430.52544
2	1017	1.25440000	(1.12)^2	1275.72480
3	784	1.12000000	(1.12)^1	878.08000
4	1488	1.00000000	(1.12)^0	1488.00000
		Total		6072.33024

Hence FV at the end of 4 th year = 6072.33 (round off)

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