Finance Time Value

What is the PV of an annuity due with 5 payments of $2,500 at an interest rate of 5.5%? $11,262.88
What’s the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%? $5,000
What’s the rate of return you would earn if you paid $950 for a perpetuity that pays $85 per year? 8.95%
What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has a cost of $1,250? PMT $81.25
What is the present value of the following cash flow stream at a rate of 12.0%?Years: 0 1 2 3 4 | | | | |CFs: $0 $1,500 $3,000 $4,500 $6,000 $10,747
At a rate of 6.5%, what is the future value of the following cash flow stream?Years: 0 1 2 3 4 | | | | |CFs: $0 $75 $225 $0 $300 $645.80
Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $10,000 at the end of the 5th year. What is the expected rate of return on this investment? I/YR 7.50%
What’s the future value of $1,500 after 5 years if the appropriate interest rate is 6%, compounded semiannually? FV = $2,016
What’s the future value of $1,200 after 5 years if the appropriate interest rate is 6%, compounded monthly? FV $1,618.62
What’s the present value of $1,525 discounted back 5 years if the appropriate interest rate is 6%, compounded monthly? PV = $1,131 = FV/(1+rPer)^NPV = $1,131
Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 18.00%, with interest paid monthly, what is the card’s EFF%? EFF% =(1+(rNOM/N))^N − 1 = 19.56%
Suppose you borrowed $12,000 at a rate of 9.0% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be? Payments = PMT $3,704.02
Suppose you borrowed $14,000 at a rate of 10.0% and must repay it in 5 equal installments at the end of each of the next 5 years. How much interest would you have to pay in the first year? Interest in Year 1 $1,400.00

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