Several of the PV or FV problems also deal with interest rates that are NOT...
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Several of the PV or FV problems also deal with interest rates that are NOT annual interest rates. In these cases care should be taken to make sure that you use the appropriate periodic rate and adjust the number of years to the number of periods. If I compound quarterly then you should use a quarterly interest rate and if it is for two years the number of periods is 2 X 4 = 8.
a)Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years? a. $28,532 b. $29,959 c. $31,457 d. $33,030 e. $34,681
b) What is the present value of the following cash flow stream at a rate of 6.25%? (year 1 = $75, year 2= $225, year 3 = $0, year 4 = 300)
a. $411.57 b. $433.23 c. $456.03 d. $480.03 e. $505.30 c)What is the present value of the following cash flow stream at a rate of 12.0%? CF Year 1 = 1500, Year 2 = 3000, year 3 = 4500 year 4 = 6000
a. $9,699 b. $10,210 c. $10,747 d. $11,284 e. $11,849 d)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
Years: 0 1 2 3 4 7 $300 CFs: $ $0 $75 $225 $0 Years: 3 0 F $0 1 + $1,500 2 + $3,000 4 + $6,000 CFs: $4,500
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