1. Suppose that one year from now you receive $100. At the end of the next nine years you receive a payment that is 1% larger than the prior year. If the cost of capital is 12% what is this stream of cash flows worth today?
2. Suppose that one year from now you will receive $400 and that at the end of every year thereafter you will receive a payment that is 3% larger than the prior payment. If the cost of capital is 7% what is this stream of cash flows worth today?
3. Suppose that you will need to save $600000 over the next twenty years to retire comfortably. What constant annual payment (20 payments) will you need to make to save this amount if the you can earn 8% annually?
4. Suppose that you take out a loan for $280000 to purchase a house. You are required to make monthly payments, and the APR is 4.0%. How much interest will you end up paying over the life of the loan (30 year mortgage)?
5. Suppose that you are evaluating the following investment opportunity. At the end of the the next five years you estimate that you will receive the following cash flows, $700, $150, $600, $1000, and $800. At the end of every year following year five you will receive a cash flow that is 1% larger than the prior cash flow. If the cost of capital is 8% how much should you be willing to invest in this opportunity?