1) Determine the answer to each of the following
questions.
1a. Find the Future Value of $2500 invested today at 11% for
10 years.
1b. Find the Future Value of $2500 invested today at 11% for
30 years.
1c. Find the Present Value of $6000 received 10 years from
today if the discount rate is 5%.
1d. Find the Present Value of $6000 received 10 years from
today if the discount rate is 10%.
1e. Find the Future Value of $3000 per year (at the end of
each year) invested at 6% for 30 years.
1f. Find the Future Value of $3000 per year (at the end of
each year) invested at 12% for 30 years.
1g. Find the Present Value of $4000 per year (at the end of
each year) if the discount rate is 15% for 20 years.
1h. Find the Present Value of $4000 per year (at the end of
each year) if the discount rate is 15% for 40 years.
2) Find the interest rates implied by each of the
following:
2a. You borrow $1500 today and promise to repay the loan by
making a single payment of $2114.00 in 5 years.
2b. You invest $500 today and receive a promise of receiving
back $193.50 for each of the next 4 years.
3) If $2000 is invested today at a 12% nominal interest rate,
how much will it be worth in 15 years if interest is
compounded
3a. Annually
3b. Quarterly
3c. Monthly
3d. Daily (365-days per year)
4) How long will it take your money to triple given the
following interest rates?
4a. 5%
4b. 10%
4c. 15%
5) After graduating from college you make it big — all because
of your success in business finance. You decide to endow a
scholarship for needy finance students that will provide $5000 per
year indefinitely, beginning 1 year from now. How much must be
deposited today to fund the scholarship under the following
conditions.
5a. The interest rate is 10%
5b. The interest rate is 10% and the first payment is made 6
years from today instead of 1 year from today.