1. Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $9,022, $7,989, and $10,875 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a 5.7 percent rate of return is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
2. One year ago, the Jenkins Family Fun Center deposited $5,176 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $5,482 to this account. They plan on making a final deposit of $7,919 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 6 percent rate of return?
3. You are expecting to receive $300 at the end of each year in years 3, 4, and 5, and then 500 each year at the end of each year in years 10 through 25, inclusive. If the appropriate discount rate is 5.8 percent, for how much would you be able to sell your claim to these cash flows today?
4. You are paying an effective annual rate of 10 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on your account?
5. Assume you deposit $9,160 at the end of each year into an account paying 12.68 percent interest. How much money will you have in the account in 15 years?
6. You expect to receive 1000 bucks every year at the end of each year, starting in year 7 and ending in year 21. If you expect the rate of return is 9.5 percent, and you invest all your cash flows at the going rate as soon as you receive them, how much money will you have at the end of year 25?