Problem 1. How long will it take $10,000 to reach $50,000 if it earns 10% interest compounded semiannually?
a.) 17 years
b.) 33 years
c.) 16.5 years
d.) 8.5 years
Problem 2. You require an 8% annual return on all investments. You will receive $1,000, $2,000, and $3,000 respectively for the next three years (end of year) on a particular investment. What is the most you be willing to pay for this investment?
a.) $5,022
b.) $2,577
c.) $6,000
d.) $4,763
Problem 3. Your partners have promised to give you $25,000 on your wedding day if you Wait 10 years to get married. Your sister is getting married today. What amount should she receive in today's dollars to match you gift? The appropriate discount rate is rate 12%.
a.) $8,049
b.) $10,000
c.) $22,321
d.) $25,000
Problem 4. You want to start saving for retirement. If you deposit$2,000 each year at the end Of the next 60 years and earn 11% on the investment, how much will you have when you retire?
a.) $792,000
b.) $1,048,114
c.) $9,510,132
d.) $10,556,246
Problem 5. What is the present value of a semi-annual ordinary annuity payment of $7,000 made for 12 years with a required annual return of 5%?
a.) $65,145
b.) $128,325
c.) $125,195
d.) $62,043
Problem 6. You get a 25-year loan of $150,000 with a 8% annual interest rate. What are the annual payments?
a.) $14,052
b.) $2,052
c.) $13,965
d.) $13,427
Problem 7. Your grandmother is offered a series of $6,000 starting one year from today. The Payments will be made at the end of each of the next 10 years. Similar risk investments are yielding 7%. What should she pay for the investment?
a.) $60,000
b.) $45,091
c.) $42,141
d.) $30,501
Problem 8. Company XYZ purchased some machinery and gave a five-year note with a Maturity value of $20,000. The discount rate is 8% annually and the interest is discounted monthly. How much did the company borrow?
a.) $13,612
b.) $13,424
c.) $19,346
d.) $12,000
Problem 9. Your father loans you $12,000 to make it through your senior year. His Repayment schedule requires payments of $1401.95 at the end of year the next 15 years. What interest rate is he charging you?
a.) 7.0%
b.) 7.5%
c.) 8.0%
d.) 8.5%
Problem 10. What is the future value of an annuity due if your required return is 10%, and Payments are $1,000 for 10 years?
a.) $15,937
b.) $16,145
c.) $17,531
d.) $11,000
Problem 11. You deposit $10,000 in a bank and plan to keep it there for five years. The bank Pay 8% annual interest compounded continuously. Calculate the future value at the end of five years.
a.) $14,693
b.) $15,000
c.) $14,918
d.) $14,500
Problem 12. Calculate the present value of $100,000 received in six months. Use an annual discount rate of 10%. Do not adjust the discount rate to a semi-annual rate. Keep it annual and adjust to the appropriate value.
a.) $95,346
b.) $56,447
c.) $90,909
d.) $100,000
Problem 13. You get a twenty-year amortized loan of $100,000 with a 5% annual interest rate. what are the annual payments?
a.) $8,718
b.) $37,689
c.) $4,762
d.) $8,024
Problem 14. What is the present value of $100,000 received in fifteen years with an annual Discount rate of 5% discounted monthly?
a.) $25,000
b.) $48,102
c.) $47,310
d.) $207,893
Problem 15. A gallon of milk cost $3.59 today. How much will it cost you to buy a gallon of milk for your grandchildren in 35 years if inflation averages 5% per year?
a.) $3.77
b.) $6.28
c.) $12.34
d.) $19.80
Problem 16. You borrow $95,000 for 12 years at an annual rate of 12%. What are the monthly Payments required to amortize this loan?
a.) $1,248
b.) $15,336
c.) $11,400
d.) $3,936
Problem 17. As a gift from your parents, you just received $50,000 for your education for the Next four years. You can earn an annual rate of 8% on your investments. How much can you withdraw each year (end of year) just using up the $50,000?
a.) $12,000
b.) $11,096
c.) $11,750
d.) $15,096
Problem 18. You would like to retire on $1,000,000. You plan on a 7% annual investment rate (3.5% semi-annually) and will put away $7,500twice a year at the end of each semi-annual period. How long before you can retire? Round to the nearest figure.
a.) 51years
b.) 25 years
c.) 35 years
d.) 66 years
Problem 19. What is the present value of an annual annuity payment of $7,000 made for 12 Years with a required return of 5% with the first payment starting today?
a.) $3,898
b.) $65,145
c.) $62,043
d.) $11,200
Problem 20. What a deal! Your new car only cost $28,300 after rebates and trade. If you Finance it for 60 months at 6% annual interest, what will be you rmonthly payments?
a.) $471.67
b.) $544.40
c.) $547.12
d.) $1,751.08
Essay. Write your answer in the space provided or on a separate sheet of paper.
Problem 21. Sum the present values of the following cashflows to be received at the end of each of the next six years $1,500, $3,500, $$3,750, $4,250, $5,000 when the discount rate is 4%.
Problem 22. How long it will take for $2,500 to become $8,865 if it is deposited and earns 5% per year compounded annually? (Calculate to the closet year.)
Problem 23. Company XYZ purchased equipment and gave a three-year note with maturity value of $12,006. The annual discount rate for the note was 14% discounted semi-annually. Calculate how much they borrowed.
Problem 24. Calculate the resent value of each of the alternatives below, if the discount rate is 12%.
a.) $45,000 today in one lump sum.
b.) $70,000 paid to you in seven equal payments of $10,000 at the end of each of the next seven years.
c.) $80,000 paid in one lump sum 7 years from now.
Problem 25. A bank agrees to give you a loan of $12,000,000 and you have t pay $1,309,908 Per year for 26 years. What is your rate of interest? What would the payments be if this were a monthly payment loan?