Single Sums:
1. What is the present value of $40,000 received 4 years from now if the relevant discount rate is 2 percent?
2. What yield is needed for $6,000 today to be worth $12,000 ten years from today?
3. How many years will it take for $100,000 today to be worth $200,000 if the investment is expected to yield 6 percent?
4. What is the future value 30 years from now of $5,500 invested today with an expected return of 7 percent?
Annuities:
5. What is the value today of a payment stream of $350/month paid for the next 5 years (60 months) with the first payment a month from now if the relevant discount rate is 4 percent?
6. What is the future value of a payment stream of $5,000/year invested in a Traditional IRA at an expected return of 8 percent for 30 years? The first investment is made at the end of the year.
7. What is the future value of the payment stream in question 6 if the payment is made at the beginning of each year.
8. What is the present value of a payment stream of $10,000 paid semiannually for four years if the relevant discount rate is 2 percent? The first payment is six months from now.
NPV/IRR/MIRR:
Given the following cash flow stream for an investment by a firm, and a discount rate of 8 percent, what is the:
9. Net Present Value (NPV)
10. Internal Rate of Return (IRR)
11. Modified Internal Rate of Return (MIRR) when the reinvestment rate is 6 percent.
12. Under which evaluation method(s) will the firm accept the project?
|
Year |
Cash Flow |
|
0 |
$ (250,000) |
|
1 |
$ 30,000 |
|
2 |
$ 40,000 |
|
3 |
$ 50,000 |
|
4 |
$ 60,000 |
|
5 |
$ 50,000 |
|
6 |
$ 40,000 |
|
7 |
$ 40,000 |
|
8 |
$ 30,000 |
|
9 |
$ 25,000 |
|
10 |
$ 15,000 |
Effective Yields, Nominal Yields & Annual Percentage Rates:
13. What is the effective annual yield on a CD that pays a nominal rate of 2 percent but has interest compounded:
a. daily
b. weekly
c. monthly
d. quarterly
e. semiannually
14. What is the nominal rate of a CD with an effective rate of 3.12% with interest compounding daily?
15. What is the APR of a credit card with a 20 day payment cycle and a periodic rate of 1%?
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