P1. What is the present value of $25000 to be received in 13 years if the interest rate is 11% and compounds once per year?
P2. What is the future value of an ordinary annuity with equal payments of $450 being deposited into a money market account at the end of every year for three years if the interest rate is 7% and compounds once per year?
P3. What is the present value of a 4-year uneven cash flow stream with $6500, $8200, $8400 and $32800 to be received the first, second, third and fourth years if the interest rate is 9% and compounds once per year?
P4. If you take out a bank loan with a 17% quoted nominal interest rate that is compounded semiannually what is the effective annual rate (EAR)? What is the EAR if the loan compounds continuously?
P5. Calculate the future value of the following cash flow stream if the opportunity cost rate is 8%: $100 at the end of the first year, $200 at the end of the second year, $500 at the end of the third year, and $650 at the end of the 4th year.
P6. What is the present value of $100 to be received at the end of every year in between now and forever if the opportunity cost rate is 5%?
P7. What is the future value of $300 deposited into a mutual fund account at the end of every month for the next 50 years? Assume that your investment compounds monthly and that you earn 12% per year.
P8. If you buy a house for $300,000 at 3.75% interest, what are your monthly payments for a 30 year conventional loan? If you pay an extra $300 each month, by how much can you reduce the term of your loan?
P9. If you invest $1,000 today and earn $1,000,000 in 40 years, what is your time-compounded annual rate of return?
P10. Suppose that 5 years from now you will receive $10,000 at the end of every year for 5 years. What is the present value of this annuity if the opportunity cost rate is 5%?