# What is the present value of \$40,000 received 4 years from now if the

Single Sums:

1.       What is the present value of \$40,000 received 4 years from now if the relevant discount rate is 2 percent?

2.       What yield is needed for \$6,000 today to be worth \$12,000 ten years from today?

3.       How many years will it take for \$100,000 today to be worth \$200,000 if the investment is expected to yield 6 percent?

4.       What is the future value 30 years from now of \$5,500 invested today with an expected return of 7 percent?

Annuities:

5.       What is the value today of a payment stream of \$350/month paid for the next 5 years (60 months) with the first payment a month from now if the relevant discount rate is 4 percent?

6.       What is the future value of a payment stream of \$5,000/year  invested in a Traditional IRA at an expected return of 8 percent for 30 years? The first investment is made at the end of the year.

7.       What is the future value of the payment stream in question 6 if the payment is made at the beginning of each year.

8.       What is the present value of a payment stream of \$10,000 paid semiannually for four years if the relevant discount rate is 2 percent?  The first payment is six months from now.

NPV/IRR/MIRR:

Given the following cash flow stream for an investment by a firm,  and a discount rate of 8 percent,  what is the:

9.       Net Present Value (NPV)

10.   Internal Rate of Return (IRR)

11.   Modified Internal Rate of Return (MIRR) when the reinvestment rate is 6 percent.

12.   Under which evaluation method(s) will the firm accept the project?

 Year Cash Flow 0 \$       (250,000) 1 \$            30,000 2 \$            40,000 3 \$            50,000 4 \$            60,000 5 \$            50,000 6 \$            40,000 7 \$            40,000 8 \$            30,000 9 \$            25,000 10 \$            15,000

Effective Yields, Nominal Yields & Annual Percentage Rates:

13.   What is the effective annual yield on a CD that pays a nominal rate of 2 percent but has interest compounded:

a.       daily

b.      weekly

c.       monthly

d.      quarterly

e.      semiannually

14.    What is the nominal rate of a CD with an effective rate of 3.12% with interest compounding daily?

15.   What is the APR of a credit card with a 20 day payment cycle and a periodic rate of 1%?