Question

Question 1

You currently have $7,500 to invest. You can invest the full amount now for a period of 9 years at which time you want to have $15,000. Approximately what rate of return is needed to accomplish this investment goal?

8.01%

7.59%

9.65%

8.50%

Question 2

If four years of college tuition cost $15,000 in 1990, what did it cost in 1965 if tuition increased at 7% per year between 1965 and 1990?

$2,764

$1,405

$3,876

$8,141

Question 3

You have the choice of receiving $15,000 today or $25,000 in six years as a down payment from someone who wants to purchase your rental property. If you could expect to earn 11 percent on invested money (i.e. your time value of money = 11%), which would you choose?

I would choose $15,000 today

I would choose $25,000 in six years

I would choose neither

Question 4

Five years from now, you would like to have $25,000 for a down payment on a home. Assuming you could earn 9% interest, how much money would you need to invest today as a lump sum to meet your goal?

$16,248

$4,177

$3,826

$11,739

Question 5

What would you be willing to pay (on January 1, 2006) for an investment which you could sell on January 1, 2036 for $45,000? Assume that the interest rate between 2006 and 2036 will be 9% annually.

$3,392

$5,219

$4,932

$6,718

Answer 1