1-) How many years will it take $2 million to grow to $6.80
million with an annual interest rate of 7 percent? (Do not round intermediate
calculations and round your final answer to 2 decimal places.)
Period
years
2-) What is the value in year 15 of a $310 cash flow made in
year 9 if interest rates are 11 percent? (Do not round intermediate
calculations and round your final answer to 2 decimal places.)
Value in year 15 $
3-) What would be more valuable, receiving $700 today or
receiving $850 in three years if interest rates are 8 percent? Which one a or
b?
a) Receiving $700 today
b) Receiving $850 in future
4-) Consider a $5,900 deposit earning 10 percent interest
per year for 10 years.
What is the future value? (Do not round intermediate
calculations and round your final answer to 2 decimal places.)
Future value $
How much total interest is earned on the original deposit?
(Do not round intermediate calculations and round your final answer to 2 decimal
places.)
Total interest
earned $
How much is interest earned on interest? (Do not round
intermediate calculations and round your final answer to 2 decimal places.)
Interest earned on
the interest $
5-) What is the value in year 4 of a $2,000 cash flow made
in year 6 if interest rates are 10 percent? (Do not round intermediate
calculations and round your final answer to 2 decimal places.)
Value in year 4 $
6-) A perpetuity pays $160 per year and interest rates are
8.1 percent. How much would its value change if interest rates increased to 9.6
percent? (Round your answer to 2 decimal places.)
Change in value $
Did the value increase or decrease?
Increase
Decrease
7-)
You are
looking to buy a car. You can afford $630 in monthly payments for five years.
In addition to the loan, you can make a $730 down payment. If interest rates
are 8.50 percent APR, what price of car can you afford? (Do not round
intermediate calculations and round your final answer to 2 decimal places.)
Present value $
8-)Assume that you contribute $260 per month to a retirement
plan for 20 years. Then you are able to increase the contribution to $520 per
month for another 30 years. Given a 7 percent interest rate, what is the value
of your retirement plan after the 50 years? (Do not round intermediate
calculations and round your final answer to 2 decimal places.)
Future value of
multiple annuities $
9-) 5-What annual interest rate would you need to earn if
you wanted a $1,000 per month contribution to grow to $82,500 in six years? (Do
not round intermediate calculations and round your final answer to 2 decimal
places.)
Annual interest rate
%
10-) Payday loans are very short-term loans that charge very
high interest rates. You can borrow $500 today and repay $615 in two weeks.
What is the compounded annual rate implied by this 23 percent rate charged for
only two weeks? (Do not round intermediate calculations and round your final
answer to 2 decimal places.)
Compounded annual
rate %
