Question 1: Consider a perpetual security with quarterly payments. What is the payment if the interest rate is 22% and the security trades for $100?
Question 2: An investment generates a cash flow of $50,000 in the first month, with the cash flows growing at 0.25% per month forever. What is the monthly interest rate if the value of the investment is $8M?"
Question 3: Consider a growing perpetuity that makes annual payments and has a value of $250. The first payment of $10 will be made in a year. The interest rate is 5%. What is the expected growth rate of the payments?
Question 4: You would like to withdraw $10K every year for 20 years starting in a year. How much should be in your investment account today if the interest rate is 6%?
Question 5: You are about to retire. You have saved $1M in your retirement account. You have calculated that you can withdraw $8,000 per month and the money will last 25 years. What's the interest rate?"
Question 6: You would like to take out a $400,000, 2% APR loan. You would like your constant monthly payment not to exceed $2,000, with the first payment one month from now. What should be the minimum length of the loan?"