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41. Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $120,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment?
a. 6.85%
b. 7.21%
c. 7.59%
d. 7.99%
e. 8.41%
42. What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has a cost of $1,250?
a. $77.19
b. $81.25
c. $85.31
d. $89.58
e. $94.06
43. What is the present value of the following cash flow stream at a rate of 6.25%?
Years: 0 1 2 3 4
    
CFs: $0 $75 $225 $0 $300
a. $411.57
b. $433.23
c. $456.03
d. $480.03
e. $505.30
44. What is the present value of the following cash flow stream at a rate of 12.0%?
Years: 0 1 2 3 4
    
CFs: $0 $1,500 $3,000 $4,500 $6,000
a. $9,699
b. $10,210
c. $10,747
d. $11,284
e. $11,849
.
45. What is the present value of the following cash flow stream at a rate of 8.0%?
Years: 0 1 2 3
   
CFs: $750 $2,450 $3,175 $4,400
a. $7,917
b. $8,333
c. $8,772
d. $9,233
e. $9,695
46. You sold a car and accepted a note with the following cash flow stream as your payment. What was the effective price you received for the car assuming an interest rate of 6.0%?
Years: 0 1 2 3 4
    
CFs: $0 $1,000 $2,000 $2,000 $2,000
a. $5,987
b. $6,286
c. $6,600
d. $6,930
e. $7,277
I/
47. At a rate of 6.5%, what is the future value of the following cash flow stream?
Years: 0 1 2 3 4
    
CFs: $0 $75 $225 $0 $300
a. $526.01
b. $553.69
c. $582.83
d. $613.51
e. $645.80
48. Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $10,000 at the end of the 5th year. What is the expected rate of return on this investment?
a. 6.77%
b. 7.13%
c. 7.50%
d. 7.88%
e. 8.27%
49. You are offered a chance to buy an asset for $7,250 that is expected to produce cash flows of $750 at the end of Year 1, $1,000 at the end of Year 2, $850 at the end of Year 3, and $6,250 at the end of Year 4. What rate of return would you earn if you bought this asset?
a. 4.93%
b. 5.19%
c. 5.46%
d. 5.75%
e. 6.05%
50. What’s the future value of $1,500 after 5 years if the appropriate interest rate is 6%, compounded semiannually?
a. $1,819
b. $1,915
c. $2,016
d. $2,117
e. $2,223

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