Reference no: EM132564859

1. What is the future value of $10,000 on deposit for 2 years at 6% simple interest?

2. How much interest is earned in just the third year on a $1,000 deposit that earns 7% interest compounded annually?

3. How much interest will be earned in the next year on an investment paying 12% compounded annually if $100 was just credited to the account for interest?

4. Assume the total expense for your current year in college equals $20,000. How much would your parents have needed to invest 21 years ago in an account paying 8% compounded annually to cover this amount?

5. A car's price is currently $20,000 and is expected to rise by 4% a year. If the interest rate is 6%, how much do you need to put aside today to buy the car one year from now?

6. If the 5-year discount factor is 0.7008, what is the interest rate?

7. What will be the approximate population of the United States, if its current population of 300 million grows at a compound rate of 2% annually for 25 years?

8. How much must be invested today in order to generate a 5-year annuity of $1,000 per year, with the first payment 1 year from today, at an interest rate of 12%?

9. What is the present value of the following payment stream, discounted at 8% annually: $1,000 at the end of year 1, $2,000 at the end of year 2, and $3,000 at the end of year 3?

10. You invested $1,200 three years ago. During the three years, you earned annual rates of return of 4.8%, 9.2%, and 11.6%. What is the value of this investment today?

11. You will be receiving cash flows of: $1,000 today, $2,000 at end of year 1, $4,000 at end of year 3, and $6,000 at end of year 5. What is the present value of these cash flows at an interest rate of 7%?

12. How much more is a perpetuity of $1,000 worth than an annuity of the same amount for 20 years? Assume an interest rate of 10% and cash flows at the end of each period.

13. What is the present value of a five-period annuity of $3,000 if the interest rate per period is 12% and the first payment is made today?

14. $50,000 is borrowed, to be repaid in three equal, annual payments with 10% interest. Approximately how much principal is amortized with the first payment?

15. What will be the monthly payment on a $75,000 30-year home mortgage at 1% interest per month?