Financial – Cheap Research Essays

1. What is the future value of $250 received today if it is invested at 6.5% compounded annually for eight years?

a. $251.30
b. $316.89
c. $412.28
d. $413.75
e. $417.04

2. How much would you have to invest today at 12% compounded semiannually to have $25,000 to buy a trailer house in 4 years?

a. $13,492.13
b. $13,678.79
c. $14,789.36
d. $15,685.31
e. $16,665.73
3. You will receive a $100,000 inheritance in 8 years. That inheritance is invested today at
10% compounded semiannually. What is the present value of your inheritance?

a. $ 41,397.93
b. $ 45,811.15
c. $ 46,650.74
d. $ 67,683.94
e. $100,000.00

4. Your want to start saving for your son’s college education. You will need $65,000 in 18 years. You can earn 10% compounded annually. How much do you need to invest today?

a. $ 2,828.18
b. $ 9,763.07
c. $11,690.82
d. $13,258.17
e. $30,322.98

5. What is the total present value of $50 received in one year, $200 received in two years, $700 received in four years, and $800 received in six years if the discount rate is 8.25%?

a. $1127.19
b. $1324.81
c. $1219.49
d. $1223.84
e. $1351.32

6. You need $2,000 to buy a new stereo for your car. If you have $500 to invest at 14% compounded annually, how long will you have to wait to buy the stereo?

a. 6.58 years
b. 8.42 years
c. 10.58 years
d. 10.75 years
e. 12.27 years

7. Given the following cash flows, what is the present value if the discount rate is 8 %?

Year Cash Flow
1 $ 200
2 $ 350
3 $ 800
4 $1125
5 $1275
6 $1350

a. $3115.07
b. $3232.89
c. $3665.70
d. $3058.96
e. $4122.62
8. What is the present value of the following set of cash flows? Assume a discount rate of
8 % .

Year Cash Flow
0 -$1000
1 $1000
2 $1400
3 -$ 200
4 -$ 800

a. $225.64
b. $278.41
c. $335.67
d. $379.41
e. $407.21
9. What is the future value of the following set of cash flows 6 years from now? Assume an interest rate of 5.5 % .

Year Cash Flow
0 -$ 800 4 $700
1 $ 100 5 $950
2 $ 300 6 $1100
3 $ 500

a. $2079.83
b. $2867.76
c. $2942.12
d. $3387.65
e. $4190.22
10. You need to borrow $18,000 to buy a truck. The current loan rate is 11.9% compounded monthly and you want to pay the loan off in equal monthly payments over 5 years. What is your monthly payment?

a. $363.39
b. $394.04
c. $399.49
d. $407.86
e. $412.22
11. Your mortgage on your house payment is $663.81. It is a 30 year mortgage at 9.0% compounded monthly. How much did you borrow?

a. $75,000
b. $77,500
c. $80,000
d. $82,500
e. $85,000
12. You have just won the lottery and will receive $1,500 per year forever. What is the present value of this infinite stream of cash flows given an 8% discount rate?

a. $ 3,721.60
b. $13,419.54
c. $18,750.00
d. $21,428.57
e. $30,000.00
13. You will receive $1,500 per year forever. The present value of this stream of cash flows is $12,500. What is the discount rate?

a. 3.3%
b. 9.3%
c. 12.0%
d. 13.6%
e. 30.0%

14. What is the future value in 15 years of $1,000 payments received at the beginning of each year for the next 15 years? Assume an interest rate of 5.25%.

a. $21,989.07
b. $23,143.49
c. $23,729.84
d. $24,495.48
e. $39,782.15

15. You are going to receive $100 three years from today. If the appropriate discount rate is 10% compounded semiannually, what is the value of the $100 today?

a. $62.06
b. $69.36
c. $74.62
d. $78.40
e. $85.43
16. You are going to receive $1000 at the end of each year for three years. If the annual discount rate is 8 %, what is the present value of this income stream?

a. $ 793.83
b. $2,577.10
c. $2,602.29
d. $2,713.75
e. $2,775.67
17. Gramps puts $35,000 into a bank account earning 5.5% compounded quarterly. How much will you have in the account after 5 years if you don’t make Gramps mad enough to take the money back before then?

a. $44,221.13
b. $44,697.79
c. $45,743.60
d. $45,992.33
e. $47,837.61
18. At the end of each year for the next ten years you will receive cash flows of $50. If the appropriate discount rate is 8.7%, what is the value of the annuity?

a. $259.82
b. $299.02
c. $308.99
d. $319.02
e. $325.16
19. You are considering investing $750 in a 10 year annuity. The rate of return you feel you should earn is 8.5 % . What annual cash flow from the annuity will provide the required return?

a. $ 70.77
b. $102.96
c. $107.92
d. $114.31
e. $129.27
20. Four years from now you will receive the first of seven annual $100 payments. The current interest rate is 7%, but by t=3 the rate will have risen to 8%. What is the present value of this cash stream?