Question

16. You are scheduled to receive a $1,000 cash flow in one year and receive a $1,250 cash flow in 3 years. If interest rates are 8.75% per year, what is the combined present value of these cash flows?

A. $2,056.94
B. $1,976.48
C. $1,891.44

D. $1,817.46
E. $1,789.92

17. You are scheduled to receive a $950 cash flow in one year, receive a $1,000 cash flow in two years, pay a $500 payment in three years and pay a $350 payment in four years. If interest rates are 6.0% per year, what is the combined present value of these cash flows?

A. $2,483
B. $2,063 C. $1,549
D. $1,143
E. $1,089

18. What annual rate of return is earned on a $350 investment when it grows to $875 in ten years?
A. 15.57%
B. 13.47%
C. 10.25%
D. 9.60%
E. 8.75%

19. Benjamin wants to retire in 25 years and he has $197,735 in his account today. He believes that he will need $800,000 upon retirement. What rate will Benjamin need to earn on the account to achieve this goal?

A. 5.25%
B. 5.75%

C. 6.25%
D. 6.75%
E. 7.50%

20. In general, people borrow money because they expect:

A. interest rates to rise.

B. interest rates to fall.

C. the time value of money to apply only if they are saving money.

D. that consumers don't need to calculate the impact of interest on their purchases.
E. their purchases to give them the satisfaction that compensates them for the interest payments charged on the loan.

Answer 1