1) In two years Boris plans to enroll at Cleese University, a prestigious university in the Pacific Northwest of the USA. If the current tuition is $23,500 per year and is expected to increase at a rate of 6% per year, how much will Boris pay in tuition his first year of school? (His first tuition payment is exactly two years from today.) In his fourth year? (His last tuition payment is exactly 5 years from today) (Rounded to the nearest dollar.)
2) Your university is running a special offer on tuition. This year's tuition cost is $18,000. Next year's tuition cost is scheduled to be $19,080. The university offers to discount next year's tuition at a rate of 6% if you agree to pay both years' tuition in full today. How much is the total tuition bill today if you take the offer?
3) You dream of endowing a chair in finance at the local university that will provide a salary of $150,000 per year forever, with the first cash flow to be one year from today. If the university promises to invest the money at a rate of 5% per year, how much money must you give the university today to make your dream a reality?
4) You have just turned 25 and may now spend a portion of the trust fund your parents established for you. The terms of the trust fund allow you to withdraw 60 beginning-of-the-year cash flows of $100,000 each. An investment firm has offered to pay you cash for all of the fund today. If the rate they use to discount the cash flows is 16% per year, what is their offer price today for your pension fund?
5) Simpson Construction had sales seven years ago of $2,150,000. This year their sales hit $4,600,000. What has been Simpson's average annual rate of growth of sales?
6) You currently have $2,500 invested at an annual rate of 8%. How long will it take for this investment to grow to a value of $3,500?
7) The furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay for the furniture in three equal annual end-of-the-year payments of $1,000 each with the first payment to be made one year from today. If the discount rate is 6%, what is the present value of the furniture payments?
8) Your department at work places $10,000 every year-end into an account earning 5%. The money is used when the corporate office fails to fully finance your profitable projects. The money has not been touched since the first deposit was made exactly five years ago. If the most recent deposit was made today, how much money is currently in the account?
9) The survey results from the National Association of Colleges and Employers (NACE) show the average annual increases in salaries for new accounting graduates to be 3.42% since the year 2000. If new starting salaries in accounting were $36,919 in 2000, what were they in 2011?
10) Suppose you invest $2,000 today, compounded monthly, with an annual interest rate of 7.50%. What is your investment worth in one year?
11) You put 20% down on a home with a purchase price of $150,000, or $30,000. The remaining balance will be $120,000. A bank will loan you this remaining balance at 4.375% APR. You will make monthly payments with a 20-year payment schedule. What is the monthly annuity payment under this schedule?
12) Josephine is seeking to expand her rare stamp collection. Each year, rare stamps increase in price at a three percent rate. She believes that if she invests her money for one year, she should be able to buy 16 stamps for what 15 stamps would cost today. What is her real interest rate (or reward for waiting)?
13) In the United States, we can buy a pair of shoes for $36. These shoes are identical in all aspects to a pair of shoes from Japan that be purchased for ¥6,000 including shipping costs. What dollar amount can we save by buying the shoes in the United States if the exchange rate is $1 for ¥150?
14) The current indirect rate is 110, the interest rate in the foreign country is 7%, the interest rate in the home country is 5%. What is the forward indirect rate if t = 2?
15) Given the following pair wise exchange rates, estimate the cross-rate of pounds per euro. $0.8410/£ $1.2223/euro.