Question

71. Last year Dania Corporation's sales were $525 million. If sales grow at 9.8% per year, how large (in millions) will they be 8 years later?

            a.         $1,142.39

            b.         $1,109.12

            c.         $1,364.22

            d.         $1,131.30

            e.         $842.93

72. How much would $1, growing at 13.7% per year, be worth after 75 years?

            a.         $18,248.03

            b.         $15,206.70

            c.         $15,358.76

            d.         $13,533.96

            e.         $18,704.24

73. How much would $100, growing at 5% per year, be worth after 10 years?

            a.         $130.31

            b.         $138.46

            c.         $162.89

            d.         $169.41

            e.         $193.84

74. You deposit $825 today in a savings account that pays 6% interest, compounded annually. How much will your account be worth at the end of 25 years?

            a.         $4,213.54

            b.         $4,001.10

            c.         $3,965.69

            d.         $3,540.79

            e.         $3,257.53

75. You deposit $500 today in a savings account that pays 6% interest, compounded annually. How much will your account be worth at the end of 40 years?

            a.         $6,274.29

            b.         $5,091.43

            c.         $3,857.14

            d.         $5,760.00

            e.         $5,142.86

76. Suppose a State of New York bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 5.0%, how much is the bond worth today?

            a.         $613.91

            b.         $564.80

            c.         $736.70

            d.         $466.57

            e.         $724.42

77. Suppose a State of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bonds is 5.4%, how much is the bond worth today?

            a.         $551.51

            b.         $768.18

            c.         $656.56

            d.         $518.68

            e.         $722.22

78. How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?

            a.         $618.45

            b.         $656.09

            c.         $451.74

            d.         $537.78

            e.         $661.47

79. How much would $5,000 due in 20 years be worth today if the discount rate were 5.5%?

            a.         $2,004.96

            b.         $1,713.64

            c.         $2,039.24

            d.         $2,073.51

            e.         $1,353.78

80. Suppose a U.S. treasury bond will pay $1,050 five years from now. If the going interest rate on 5-year treasury bonds is 4.25%, how much is the bond worth today?

            a.         $852.72

            b.         $878.31

            c.         $750.40

            d.         $656.60

            e.         $673.65

Answer 1

Question 71:

Sales in Year 0 = $525 million

n = 8 years

g = growth rate = 9.8%

Sales in 8 years = Sales in Year 0 * (1+r)^n

= $525 million * (1+9.8%)^8

= $525 million * 2.11260703

= $1,109.11869

= $1,109.12

Sales 8 years later is $1,109.12

Option b is correct

Question 72:

PV = Present Value = $1

g = growth rate = 13.7%

n = 75 years

Future Value = PV * (1+g)^n

= $1 * (1+13.7%)^75

= $1 * 15,206.6956

= $15,206.70

Therefore, future worth is $15,206.70

Option b is correct

Question 73:

PV = Present Value = $100

g = growth rate = 5%

n = 10 years

Future Value = PV * (1+g)^n

= $100 * (1+5%)^10

= $100 * 1.62889463

= $162.889463

Therefore, future worth in 10 years is $162.89

Option c is correct

Question 74:

PV = Present Value = $825

r = annualrate = 6%

n = 25 years

Future Value = PV * (1+r)^n

= $825 * (1+6%)^25

= $825 * 4.29187072

= $3,540.79334

Therefore, account worth in 25 years is $3,540.79

Option d is correct

Question 75:

PV = Present Value = $500

r = annualrate = 6%

n = 40 years

Future Value = PV * (1+r)^n

= $500 * (1+6%)^40

= $500 * 10.2857179

= $5,142.85895

Future worth in 40 years is $5,142.86

Option e is correct

Question 76:

FV = Future Value = $1,000

n = 10 years

r = interest rate = 5%

Bond worth today = FV / (1+r)^n

= $1,000 / (1+5%)^10

= $1,000 / 1.62889463

= $613.913252

Therefore, bond worth today is $613.91

Option a is correct

Question 77:

FV = Future Value = $1,000

n = 8 years

r = interest rate = 5.4%

Bond worth today = FV / (1+r)^n

= $1,000 / (1+5.4%)^8

= $1,000 / 1.52308762

= $656.561045

Therefore, bond worth today $656.56

Option c is correct

Question 78:

FV = Future Value = $20,000

n = 50 years

r = interest rate = 7.5%

Present Value = FV / (1+r)^n

= $20,000 / (1+7.5%)^50

= $20,000 / 37.189746

= $537.782646

= $537.78

Present Value is $537.78

Option d is correct

Question 79:

FV = Future Value = $5,000

n = 20 years

r = interest rate = 5.5%

Present Value = FV / (1+r)^n

= $5,000 / (1+5.5%)^20

= $5,000 / 2.91775749

= $1,713.64481

Present Value os $1,713.64

Question 80:

FV = Future Value = $1,050

n = 5 years

r = interest rate = 4.25%

Present Value = FV / (1+r)^n

= $1,050 / (1+4.25%)^5

= $1,050 / 1.23134661

= $852.724969

= $852.72

Present Value is $852.72

Option a is correct