Reference no: EM131508764

1. 2 year(s) ago, Caroline invested 7,390 dollars. She has earned and will earn compound interest of 11.6 percent per year. In 1 year(s) from today, Mardy can make an investment and earn simple interest of 3.9 percent per year. If Mardy wants to have as much in 6 years from today as Caroline will have in 6 years from today, then how much should Mardy invest in 1 year(s) from today?

2. 2 year(s) ago, Rafer deposited 1,130 dollars in an account that has earned and will earn 8.36 percent per year in compound interest. If Lainie deposits 1,540 dollars in an account in 1 year(s) from today that earns simple interest, then how much simple interest per year must Lainie earn to have the same amount of money in 8 years from today as Rafer will have in 8 years from today? Answer as an annual rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

3. What is X if X equals the value of investment A plus the value of investment B? Investment A is expected to pay 13,300 dollars in 3 year(s) from today and has an expected return of 11.49 percent per year. Investment B is expected to pay 14,900 dollars in 6 year(s) from today and has an expected return of 3.92 percent per year.

4. Sasha owns two investments, A and B, that have a combined total value of 37,100 dollars. Investment A is expected to pay 28,100 dollars in 7 year(s) from today and has an expected return of 7.67 percent per year. Investment B is expected to pay X in 6 years from today and has an expected return of 11.14 percent per year. What is X, the cash flow expected from investment B in 6 years from today?

5. Sasha owns two investments, A and B, that have a combined total value of 56,300 dollars. Investment A is expected to pay 21,400 dollars in 1 year(s) from today and has an expected return of 16.2 percent per year. Investment B is expected to pay 67,933 in 6 years from today and has an expected return of R per year. What is R, the expected annual return for investment B? Answer as an annual rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

6. 3 year(s) ago, Mack invested 5,080 dollars. In 2 year(s) from today, he expects to have 7,690 dollars. If Mack expects to earn the same annual return after 2 year from today as the annual rate implied from the past and expected values given in the problem, then how much does Mack expect to have in 6 years from today?

7. Sasha owns two investments, A and B, that have a combined total value of 34,400 dollars. Investment A is expected to pay 27,400 dollars in 5 year(s) from today and has an expected return of 5.81 percent per year. Investment B is expected to pay 15,586 dollars in T years from today and has an expected return of 5.39 percent per year. What is T, the number of years from today that investment B is expected to pay 15,586 dollars? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00).

8. 2 year(s) ago, Fatima invested 5,450 dollars. In 1 year(s) from today, she expects to have 7,690 dollars. If Fatima expects to earn the same annual return after 1 year from today as the annual rate implied from the past and expected values given in the problem, then in how many years from today does she expect to have exactly 11,020 dollars? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00).

9. Penny bought a new truck today from Middlefield Motors. She will receive a cash rebate of 3,100 dollars from Middlefield Motors today, pay 19,100 dollars to Middlefield Motors in 1 year(s) from today, receive a cash rebate of 7,800 dollars from Middlefield Motors in 4 year(s) from today, and pay 18,300 dollars to Middlefield Motors in 9 year(s) from today. If the discount rate is 4.96 percent, then what is the present value of the cash flows associated with this transaction? Note: the correct answer is less than zero.

10. Preeti has an investment that is worth 63,700 dollars and has an expected return of 5.65 percent. The investment is expected to pay her 30,000 dollars in 3 year(s) from today and X dollars in 6 year(s) from today. What is X?

11. You own a building that is worth 68,500 dollars and is expected to produce quarterly cash flows of 2,700 dollars forever. The first quarterly cash flow is expected in 3 months from today. What is the expected quarterly cost of capital for the building? Answer as a quarterly rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

12. An investment, which is worth 39,300 dollars and has an expected return of 12.43 percent, is expected to pay fixed annual cash flows forever with the next annual cash flow expected in 1 year. What is the present value of the annual cash flow that is expected in 4 years from today?

13. Quantum Pizza took out a loan from the bank today for 23,600 dollars. The loan requires Quantum Pizza to make a special payment of 11,500 dollars to the bank in 1 years from today and also make regular, fixed payments of X to the bank each year forever. The interest rate on the loan is 12.38 percent per year and the first regular, fixed annual payment of X will be made to the bank in one year from today. What is X, the amount of the regular, fixed annual payment?

14. An investment is expected to generate annual cash flows forever. The first annual cash flow is expected in 1 year and all subsequent annual cash flows are expected to grow at a constant rate annually. We know that the cash flow expected in 2 year(s) from today is expected to be 1,310 dollars and the cash flow expected in 8 years from today is expected to be 3,200 dollars. What is the cash flow expected to be in 5 years from today?

15. You own a store that is expected to make annual cash flows forever. The cost of capital for the store is 15.47 percent. The next annual cash flow is expected in one year from today and all subsequent cash flows are expected to grow annually by 2.77 percent. What is the value of the store if you know that the cash flow in 5 years from today is expected to be 9,500?

16. You own two investments, A and B, that have a combined total value of 37,029 dollars. Investment A is expected to make its next payment in 1 month. A's next payment is expected to be 272 dollars and subsequent payments are expected to grow by 0.33 percent per month forever. The expected return for investment A is 1.13 percent per month. Investment B is expected to pay 83 dollars each quarter forever and the next payment is expected in 3 months. What is the quarterly expected return for investment B? Answer as a quarterly rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

17. Oxygen Optimization just bought a new filtration system for 189,000 dollars. To pay for the filtration system, the company took out a loan that requires Oxygen Optimization to pay the bank a special payment of 102,100 dollars in 4 year(s) and also make regular annual payments forever. The first regular payment is expected in 1 year and is expected to be 1,600 dollars. All subsequent regular payments are expected to increase by a constant rate each year forever. The interest rate on the loan is 17.73 percent per year. What is the annual growth rate of the regular payments expected to be? Answer as an annual rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

18. What is the value of an investment that will pay investors 1,430 dollars per year for 9 years and will also pay investors an additional 6,960 dollars in 1 year(s) from today if the expected return for the investment is 5.34 percent per year and the first annual payment of 1,430 dollars will be paid to investors in one year from today?

19. Bianca took out a loan from the bank today for X. She plans to repay this loan by making payments of 2,340 dollars per month for a certain amount of time. If the interest rate on the loan is 0.3 percent per month, she makes her first payment of 2,340 dollars later today, and she makes her final monthly payment of 2,340 dollars in 7 months, then what is X, the amount of the loan?

20. Sasha has an investment worth 51,700 dollars. The investment will make a special payment of X to Sasha in 6 years from today. The investment also will make regular, fixed annual payments of 6,700 dollars to Sasha with the first of these payments made to Sasha later today and the last of these annual payments made to Sasha in 8 years from today. The expected return for the investment is 5.84 percent per year. What is X, the amount of the special payment that will be made to Sasha in 6 years?

21. Jens just took out a loan from the bank for 9,223 dollars. He plans to repay this loan by making a special payment to the bank of 1,420 dollars in 4 years and by also making equal, regular annual payments of X for 7 years. If the interest rate on the loan is 8.31 percent per year and he makes his first regular annual payment in 1 year, then what is X, Jens's regular annual payment?

22. An investment, which is worth 27,000 dollars and has an expected return of 13.45 percent, is expected to pay fixed annual cash flows for a given amount of time. The first annual cash flow is expected in 1 year from today and the last annual cash flow is expected in 8 years from today. What is the present value of the annual cash flow that is expected in 6 years from today?

23. Fatima wants to buy a boat that is available at two dealerships. The price of the boat is the same at both dealerships. Middlefield Motors would let her make quarterly payments of 1,110 dollars for 11 years at a quarterly interest rate of 1.81 percent. Her first payment to Middlefield Motors would be due in 3 months. If Fairfax Boats would let her make equal monthly payments for 3 years at a monthly interest rate of 0.96 percent and if her first payment to Fairfax Boats would be today, then how much would each monthly payment to Fairfax Boats be?

24. Allysha just borrowed 30,100 dollars. She plans to repay this loan by making a special payment of 7,300 dollars in 3 years and by making regular annual payments of 7,300 dollars per year until the loan is paid off. If the interest rate on the loan is 8.11 percent per year and she makes her first regular annual payment of 7,300 dollars in one year, then how many regular annual payments of 7,300 dollars must Allysha make? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00).

25. Celeste just borrowed 39,000 dollars. She plans to repay this loan by making equal quarterly payments of 1,626.97 dollars for 29 quarters. If she makes her first quarterly payment later today, then what is the quarterly interest rate on the loan? Answer as a quarterly rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

26. Mary Jo wants to buy a boat that is available at two dealerships in town. The price of the boat is the same at both dealerships. Middlefield Motors would let her make quarterly payments of 2,226.45 dollars for 7 years at a quarterly interest rate of 3.5 percent. Her first payment to Middlefield Motors would be due immediately. If Fairfax Boats would let her make equal monthly payments of 1,340.57 for 3 years and if her first payment to Fairfax Boats would be in 1 month, then what is the monthly interest rate that Mary Jo is being charged by Fairfax Boats? Answer as a monthly rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

27. Siri plans to retire in 4 years from today with 486,500 dollars in her retirement account, which has an annual return of 10.46 percent. If she receives annual retirement payments of X, with her first annual retirement payment of X received in 4 years from today and her last annual retirement payment of X received in 11 years from today, then what is X, the amount of each retirement payment?

28. Sasha plans to retire in 6 years from today with 270,706 dollars in her retirement account, which has an annual return of 6.99 percent. If she receives 59,000 dollars per year from her account and she receives her first 59,000 dollar payment in 6 years from today, then how many payments of 59,000 dollars can Sasha expect to receive? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00).

29. Sasha plans to retire in 5 years from today with 327,180 dollars in her retirement account. If she receives 99,000 dollars per year from her account and she receives her first 99,000 dollars payment in 6 years from today and her last 99,000 dollars payment in 10 years from today, then what is the expected annual return for her account? Answer as an annual rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

30. A building is expected to generate no cash flows for several years and then generate annual cash flows forever. What is the value of the building if the first annual cash flow is expected in 6 years from today, the first annual cash flow is expected to be 16,200 dollars, all subsequent annual cash flows are expected to be 2.9 percent higher than the cash flow generated in the previous year, and the cost of capital for the building is 13.27 percent?