1. Today, you are purchasing a $3,741 4-year car loan at 7 percent. You will pay annually at the end of each year. What is the amount of each payment?
2. What is the future value of $4,195 invested for 14 years at 13% if interest is compounded semi-annually (twice a year)?
3. Barrett Pharmaceuticals is considering a drug project that costs $176,677 today and is expected to generate end-of-year annual cash flows of $13,721, forever. At what discount rate would Barrett be indifferent between accepting and rejecting the project?
4. How many years it will take you to double your money if you can earn 11% each year, given that compounding is quarterly?
5. What is the future value of $3,533 invested for 5 years at 13% if interest is compounded quarterly?
6. How much do you need to invest today in order to have $10,891 at the end of 15 years if you are sure to earn an interest at the rate of 5%?
7. Consider a 10-year loan with monthly payments at 10%. If the loan amount is $250,000, compute the Interest paid during the 6th year.
8. What is the future value of annual payments of $3,598 for 19 years at 5 percent?
9. Assume interest rate of 7%. Suppose that you receive $110,007 at the end of each year for 4 years. Suppose that this cash flow starts at the end of the fourth year. Compute the present value.
10. The ABC Company is considering a new project which will require an initial cash investment of $17,248. The projected cash flows for years 1 through 4 are $7,945, $8,617, $9,024, and $5,467, respectively. If the appropriate discount rate is 4%, compute the NPV of the project.
11. If you receive $451 at the end of each year for the first three years and $574 at the end of each year for the next three years. What is the present value? Assume interest rate is 11%.
12. What should you be willing to pay in order to receive $687 annually forever, if you require 11% per year on the investment?
13. What is the future value of $7,514 for 12 years at 7 percent if interest is compounded semi-annually?
14. Kelly starting setting aside funds 4 years ago to buy some new equipment for her firm. She has saved $3,645 each quarter and earned an average rate of return of 8 percent. How much money does she currently have saved for this purpose?
15. How many years it will take to grow your money from $4,569 to $6,111 if you can earn an interest of 8% compounded monthly?
16. What is the effective rate of 13% compounded monthly?
17. If you can triple your money in 23 years, what is the implied rate of interest?
18. In order to buy a house, you take a loan of 100,000 at 7.5% for a period of 13 years. Compute the balance remaining at the end of 5 years.
19. Gertrude Carter and Co. has an outstanding loan that calls for equal annual payments of $14,903 over the 10-year life of the loan. The original loan amount was $100,000 at an APR of 8 percent. How much of the third payment is interest?
20. If you can double your money in 23 years, what is the implied annual rate of interest, given that compounded semi-annually?
21. If you can double your money in 29 years, what is the implied annual rate of interest, given that compounded in quarterly?
22. Say, you deposit $1,557 in a bank for 18 years. What is the amount you will have in the bank at the end of 18 years if interest of 8 % for first 7 years and interest of 8 % for the remaining years?
23. What is the future value of quarterly payments of $806 for 19 years at 6 percent?
24. If you put $700 in a savings account with a 10% nominal rate of interest compounded monthly, what will the investment be worth in 21 months?
25. How many months it will take to grow your money from $3,863 to $6,218 if you can earn an interest of 11% compounded monthly?
26. If the effective rate is 9%. What is the nominal rate if compounding is daily.
27. The Perpetual Life Insurance Co is trying to sell you an investment policy that will pay you and your heirs $11,076 per year forever. Suppose the Perpetual Life Insurance Co. told you the policy costs $191,925. At what interest rate would this be a fair deal?
28. Assume interest rate of 9%. A company receives cash flows of $928 at the end of year 5, $226 at the end of year 7, and $592 at the end of year 10. Compute the future value of this cash flow stream.
29. The ABC Company is considering a new project which will require an initial cash investment of $5,523. The project will produce no cash flows for the first 5 years. The projected cash flows for years 6 through9 are $5,492, $5,502, $5,113, and $3,132, respectively. If the appropriate discount rate is 7%, compute the NPV of the project.
30. Assume interest rate of 8%. A company receives cash flows of $88,910 at the end of years 4, 5, 6, 7, and 8, and cash flows of $244,648 at the end of year 10. Compute the future value of this cash flow stream.
31. What is the future value of $1,094 invested for 4 years at 16% if interest is compounded semi-annually?
32. How many years it will take to grow your money from $4,615 to $6,725 if you can earn an interest of 13% compounded quarterly?
33. How much do you need to invest today in order to have $6,515 at the end of 14 years if you are sure to earn an interest at the rate of 15%, if interest is compounded monthly?
34.How many years it will take you to quadruple (means 4 times) your money if you can earn 11.86% each year?
35.How much do you need to invest today in order to have $320 at the end of 10 years if you are sure to earn an interest at the rate of 13%, if interest is compounded quarterly?
36.Say, you deposit $4,382 in a bank for 16 years. What is the amount you will have in the bank at the end of 16 years if interest of 5 % compounded monthly for first 7 years and interest of 8 % compounded quarterly for the remaining years?