SHOW YOUR CALCULATIONS AND WORK
1) Asendia USA has an unfunded pension liability of $6 million that must be paid in 20 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. The relevant discount rate is 6.25%. What is the present value of this liability?
2) You would like to give your 3-year old daughter $60,000 towards her college education 15 years from now. How much money must you set aside today for this purpose if you can think you can earn 7.5% per year on your investments?
3) Fifteen years ago, you put away $5,000. Today, that investment is now worth $16,535. What is the average annual rate of return you earned on your investment?
4) You just won first place in a CUNY essay writing contest, and as your prize, you will receive $500 a month each month for the next 6 years. If you can earn 7% on your money, what is the total prize worth to you today?