1) In 1930, the highest paid player in major league baseball was Babe Ruth of the New York Yankees, with an annual salary of $80,000. In 2005, the highest paid player in major league baseball player was Alex Rodriguez, also of the New York Yankees, with a salary of $25,000,000. What was the average annual rate of growth in the top baseball salary over this time period?

A) 7.96%

B) 18.70%

C) 3.31%

D) 4.17%

2) Your employer has agreed to place year-end deposits of $1,000, $2,000 and $3,000 into your retirement account. The $1,000 deposit will be one year from today, the $2,000 deposit two years from today, and the $3,000 deposit three years from today. If your account earns 5% per year, how much money will you have in the account at the end of year three when the last deposit is made?

A) $5,357.95

B) $6,000

C) $6,202.50

D) $6,727.88

3) Which of the following is greater (answers rounded to the nearest cent)?

A) An ordinary annuity of $100.00 per year for three years discounted at 10% per year

B) A present value of $248.69

C) A future value of $331.00 three years from today, given an interest rate of 10% per year

D) You would be indifferent to the three choices since they all have the same present value when using an interest rate of 10% per year.

4) You have the opportunity to purchase mineral rights to a property in North Dakota with expected annual cash flows of $10,000 per year for eight years. If you discount these cash flows at a rate of 12% per year, what are these cash flows worth today if the cash flows occur at the end of each period?

A) $55,637.57

B) $49,676.40

C) $80,000.00

D) $122,996.93

5) A series of equal periodic finite cash flows that occur at the beginning of the period are known as a/an ________.

A) ordinary annuity

B) annuity due

C) perpetuity

D) amortization