Question 1

Kevin plans to invest $10,000 today, in exchange for a fixed payment at the end of 6 years.

If the appropriate annual interest rate on the investment is 8%, compounded annually.

Task: Compute the Future Value of this investment

Question 2

On January 1, 2016, Yin invested $25,000 for a year. The interest rate is 10.8%, Compounding is based on a quarterly basis.

Task: Compute the Future Value

Question 3

Say you want to know the annual interest rate you need to earn to grow $1,000 today to $1,750 in 10 years.

Question 4

Turp and Tyne Distillery is considering investing in a two-year project. The company’s required rate of return is 10%. The present value of $1 for one period at 10% is .899 and .786 for two periods at 10%. The project is expected to create cash flows, net of taxes, of $250,000 in the first year, and $320,000 in the second year. The distillery should invest in the project if the project’s cost is less than or equal to: