Fin quiz 4

Question 1

Assume interest rate of 4%. Suppose that you receive $88,474 at the end of each year for 4 years. Suppose that this cash flow starts at the end of the fourth year. Compute the present value.

Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points.

Question 2

How many years it will take you to double your money if you can earn 13% each year, given that compounding is quarterly? Note: Do not write "years" in your answer.

Question 3

The ABC Company is considering a new project which will require an initial cash investment of $10,415. The projected cash flows for years 1 through 4 are $8,529, $6,611, $9,366, and $4,876, respectively. If the appropriate discount rate is 10%, compute the NPV of the project.

Enter your answer rounded off to two decimal points. Do not enter $ in the answer .

Question 4

Say, you deposit $3,302 in a bank for 17 years. What is the amount you will have in the bank at the end of 17 years if interest of 5 % for first 7 years and interest of 7 % for the remaining years? Note: Do not put $ sign in your answer.

Question 5

If the effective rate is 12%. What is the nominal rate if compounding is daily. Do not enter the symbol % in your answer. Simply enter the answer in percentages rounded off to two decimal points.

Question 6

Assume interest rate of 9%. A company receives cash flows of $928 at the end of year 5, $226 at the end of year 7, and $592 at the end of year 10. Compute the future value of this cash flow stream.

Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points.

Question 7

Today, you are purchasing a $3,483 5-year car loan at 12 percent. You will pay annually at the end of each year. What is the amount of each payment?

Question 8

In order to buy a house, you take a loan of 100,000 at 7.5% for a period of 13 years. Compute the balance remaining at the end of 5 years.

Do not enter the symbol $ in your answer. Enter your answer as a positive number. Simply enter the answer rounded off to two decimal points.

Question 9

If you put $700 in a savings account with a 10% nominal rate of interest compounded monthly, what will the investment be worth in 21 months (round to the nearest dollar)?

a.

$827

b.

$833

c.

$828

d.

$1,176

e.

$770

Question 10

What is the future value of quarterly payments of $504 for 7 years at 6 percent?

Question 11

The Perpetual Life Insurance Co is trying to sell you an investment policy that will pay you and your heirs $13,124 per year forever. Suppose the Perpetual Life Insurance Co. told you the policy costs $192,923. At what interest rate would this be a fair deal? Just enter the number in percentages up to 2 decimal points. Do not enter % in the answer box.

Question 12

Barrett Pharmaceuticals is considering a drug project that costs $180,372 today and is expected to generate end-of-year annual cash flows of $11,811, forever. At what discount rate would Barrett be indifferent between accepting and rejecting the project?

Just enter the number in percentages up to 2 decimal points. Do not enter % in the answer box.

Question 13

How many months it will take to grow your money from $4,269 to $7,242 if you can earn an interest of 9% compounded monthly? Note: Do not write "months" in your answer. Simply write the number in the answer box.

Question 14

What should you be willing to pay in order to receive $710 annually forever, if you require 6% per year on the investment?

Just enter the number up to 2 decimal points. Do not enter $ in the answer box.

Question 15

Consider a 10-year loan with monthly payments at 10%. If the loan amount is $250,000, compute the Interest paid during the 6th year.

Enter your answer rounded off to two decimal points. Do not enter $ in the answer box.

Question 16

How many years it will take to grow your money from $4,133 to $9,600 if you can earn an interest of 12% compounded quarterly? Note: Do not write "years" in your answer. Simply write the number in the answer box.

Question 17

Kelly starting setting aside funds 9 years ago to buy some new equipment for her firm. She has saved $7,579 each quarter and earned an average rate of return of 5 percent. How much money does she currently have saved for this purpose?

Question 18

How many years it will take you to quadruple (means 4 times) your money if you can earn 10.46% each year? Note: Do not write "years" in your answer. Simply write the number in the answer box.

Question 19

What is the future value of $3,317 invested for 14 years at 14% if interest is compounded quarterly? Note:Do not put $ sign in your answer. Simply write the number in the answer box.

Question 20

If you can double your money in 18 years, what is the implied annual rate of interest, given that compounded in quarterly? Note: give your answer in percentages. Note: Do not put % sign in your answer. Simply write the number in percentages in the answer box.

Question 21

How much do you need to invest today in order to have $5,486 at the end of 11 years if you are sure to earn an interest at the rate of 11%? Note: Do not put $ sign in your answer. Simply write the number in the answer box.

Question 22

How many years it will take to grow your money from $3,194 to $7,778 if you can earn an interest of 16% compounded monthly? Note: Do not write "years" in your answer. Simply write the number in the answer box.

Question 23

If you receive $274 at the end of each year for the first three years and $956 at the end of each year for the next three years. What is the present value? Assume interest rate is 7%.

Hint: This is an uneven cash flow problem. Use the CF function and solve for NPV to get the answer.

Just enter the number up to 2 decimal points. Do not enter $ in the answer box.

Question 24

Assume interest rate of 7%. A company receives cash flows of $116,553 at the end of years 4, 5, 6, 7, and 8, and cash flows of $296,739 at the end of year 10. Compute the future value of this cash flow stream.

Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points.

Question 25

How much do you need to invest today in order to have $7,314 at the end of 9 years if you are sure to earn an interest at the rate of 11%, if interest is compounded quarterly? Note: Do not put $ sign in your answer. Simply write the number in the answer box.

Question 26

What is the effective rate of 10% compounded monthly?

Do not enter the symbol % in your answer. Simply enter the answer in percentages rounded off to two decimal points.

Question 27

If you can triple your money in 28 years, what is the implied rate of interest? Note: Do not put % sign in your answer. Simply write the number in percentages in the answer box..

Question 28

What is the future value of $114 invested for 6 years at 16% if interest is compounded semi-annually? Note: Do not put $ sign in your answer. Simply write the number in the answer box.

Question 29

The ABC Company is considering a new project which will require an initial cash investment of $5,846. The project will produce no cash flows for the first 5 years. The projected cash flows for years 6 through 9 are $4,628, $5,400, $6,495, and $3,450, respectively. If the appropriate discount rate is 9%, compute the NPV of the project.

Enter your answer rounded off to two decimal points. Do not enter $ in the answer box.

Question 30

What is the future value of $2,466 for 9 years at 4 percent if interest is compounded semi-annually? Note: Do not enter "$" in your answer. Simply write down the number that you get as your answer.

Question 31

Gertrude Carter and Co. has an outstanding loan that calls for equal annual payments of $14,903 over the 10-year life of the loan. The original loan amount was $100,000 at an APR of 8 percent. How much of the third payment is interest?

Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points.

Question 32

What is the future value of $3,097 invested for 22 years at 15% if interest is compounded semi-annually (twice a year)? Note: Do not put $ sign in your answer. Simply write the number in the answer box.

Question 33

Say, you deposit $2,056 in a bank for 19 years. What is the amount you will have in the bank at the end of 19 years if interest of 6 % compounded monthly for first 7 years and interest of 7 % compounded quarterly for the remaining years? Note: Do not put $ sign in your answer. Simply write the number in the answer box.

Question 34

How much do you need to invest today in order to have $9,946 at the end of 19 years if you are sure to earn an interest at the rate of 7%, if interest is compounded monthly? Note: Do not put $ sign in your answer. Simply write the number in the answer box.

Question 35

What is the future value of annual payments of $2,947 for 15 years at 6 percent?

Question 36

If you can double your money in 17 years, what is the implied annual rate of interest, given that compounded semi-annually? Note: give your answer in percentages. Note: Do not put % sign in your answer. Simply write the number in percentages in the answer box.