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6.In 1998, the average price of a gallon of gas was $1.09. Today, the average price...

6.In 1998, the average price of a gallon of gas was $1.09. Today, the average price of a gallon of gas is $2.84. At what annual rate has a gallon of gas increased over the last 20 years? (Answer as a percent. Enter only numbers and decimals in your response. Round to 2 decimal places.)

7.Your goal is to have $76,023. If you can earn 11.9% per year and you invest $18,064 today, how many years until you reach your goal?

8.You are buying an investment property for $383,240 today. Through research, you have determined that the value of the property is likely to grow at a rate of 7.17% per year, on average. How long until the value of the property grows to $521,360?

9.Calculate the value of the cash flows at time 6. The interest rate is 11.99%.

0 1 2
$1,135 $2,375 $3,065

10.You are looking at an investment that will pay you $25,919 in year 2, $42,812 in year 4 and $45,841 in year 6. If your required return is 8.34%, what is the most you should pay for the investment? (In other words, how much is the project worth today?)

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Answer #1

2.84 Solution 6. Price Today Price 20 years ago Time (P) (A) (t) $ $ $ 1.09 20.00 Rate = (A/P)^1/t-1 Rate -1 ($ 2.84 / 1.09 )

Solution 8. Investment Desired Amount $ 3,83,240 $ 5,21,360 Rate 7.17% Year 0 1 Interest @ 7.17% Closing Bal. $ 3,83,240 $ 27

Solution 10. PV factor @ Present Year 8.34% Amount Value 1 0.9230 $ 2 0.8520 $ 25,919 $ 22,082.11 0.7864 $ 4 0.7258 $ 42,812

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