1) Compute future value in five years of $5,000 received today if your investments pay
a) 6 percent compounded annually
b) 8 percent compounded annually
c) 10 percent compounded annually
d) 10 percent compounded semi-annually
e) 10 percent compounded quarterly
2) What do your replies to these queries tell you about relation between future values and interest rates and between future values and number of compounding periods per year?
3) find out future values of give first supposing that payments are made on last day of period and then supposing payments are made on first day of the period:
Payment Years Interest Rate
$123 13 13%
4,555 8 8
74484 5 10
167332 9 1
4) Project has the initial cash outlay of $750,000 and the annual cash inflow of $220,000 for next 5 years. Assets involved in project can be sold for $50,000 when project is finished. The necessary rate of return on project is 15%. Must the project be accepted based on NPV rule?