WEEK 4 FINANCE QUESTIONS WITH A+ ANSWER

Question 1

If you can double your money in 14 years, what is the implied annual rate
of interest, given that compounded semi-annually? Note: give your answer
in percentages. Note: Do not put % sign in your answer. Simply write the
number in percentages in the answer box.

Question 2

What is the future value of quarterly payments of $674 for 18
years at 7 percent?

Question 3

If you can double your money in 17 years, what is the implied
annual rate of interest, given that compounded in quarterly? Note: give
your answer in percentages. Note: Do not put % sign in your answer. Simply
write the number in percentages in the answer box.

Question 4

What is the future value of annual payments of $7,466 for 14
years at 6 percent?

Question 5

What should you be willing to pay in order to receive $549
annually forever, if you require 5% per year on the investment?

Just enter the number up to 2 decimal
points. Do not enter $ in the answer box.

Question 6

How many years it will take to grow your money from $3,428 to
$6,835 if you can earn an interest of 6% compounded quarterly? Note: Do
not write “years” in your answer. Simply write the number in the
answer box.

Question 7

Kelly starting setting aside funds 8 years ago to buy some new
equipment for her firm. She has saved $1,515 each quarter and earned an
average rate of return of 9 percent. How much money does she currently
have saved for this purpose?

Question 8

How many years it will take you to double your money if you can
earn 13% each year, given that compounding is quarterly? Note: Do not
write “years” in your answer. Simply write the number in the
answer box.

Question 9

Assume interest rate of 5%. A company receives cash flows of
$106,444 at the end of years 4, 5, 6, 7, and 8, and cash flows of $297,138
at the end of year 10. Compute the future value of this cash flow stream.

Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.

Question 10

What is the future value of $632 invested for 12 years at 10%
if interest is compounded quarterly? Note: Do not put $ sign in your
answer. Simply write the number in the answer box.

Question 11

If the effective rate is 12%. What is the nominal rate if
compounding is daily. Do not enter the symbol % in your answer.
Simply enter the answer in percentages rounded off to two decimal points.

Question 12

Today, you are purchasing a $3,881 10-year car loan at 13
percent. You will pay annually at the end of each year. What is the amount
of each payment?

Question 13

What is the future value of $10,360 for 14 years at 7 percent
if interest is compounded semi-annually? Note: Do not enter “$”
in your answer. Simply write down the number that you get as your answer.

Question 14

Gertrude Carter and Co. has an outstanding loan that calls for
equal annual payments of $14,903 over the 10-year life of the loan. The
original loan amount was $100,000 at an APR of 8 percent. How much of the
third payment is interest?

Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.

Question 15

In order to buy a house, you take a loan of 100,000 at 7.5% for
a period of 13 years. Compute the balance remaining at the end of 5 years.

Do not enter the symbol $ in your answer.
Enter your answer as a positive number. Simply enter the answer rounded off to
two decimal points.

Question 16

How much do you need to invest today in order to have $8,048 at
the end of 6 years if you are sure to earn an interest at the rate of 8%,
if interest is compounded quarterly? Note: Do not put $ sign in your
answer. Simply write the number in the answer box.

Question 17

How much do you need to invest today in order to have $10,016
at the end of 13 years if you are sure to earn an interest at the rate of
4%? Note: Do not put $ sign in your answer. Simply write the number in the
answer box.

Question 18
Say, you deposit
$2,035 in a bank for 15 years. What is the amount you will have in the bank at
the end of 15 years if interest of 5 % compounded monthly for first 7 years and
interest of 10 % compounded quarterly for the remaining years? Note: Do not put
$ sign in your answer. Simply write the number in the answer box.

Question 19

What is the future value of $4,515 invested for 18 years at 19%
if interest is compounded semi-annually? Note: Do not put $ sign in your
answer. Simply write the number in the answer box.

Question 20

Barrett Pharmaceuticals is considering a drug project that
costs $177,695 today and is expected to generate end-of-year annual cash
flows of $14,677, forever. At what discount rate would Barrett be
indifferent between accepting and rejecting the project?

Just enter the number in percentages
up to 2 decimal points. Do not enter % in the answer box.

Question 21

How many years it will take you to quadruple (means 4 times)
your money if you can earn 7.14% each year? Note: Do not write
“years” in your answer. Simply write the number in the answer
box.

1 points
Question 22

What is the future value of $4,195 invested for 14 years at 13%
if interest is compounded semi-annually (twice a year)? Note: Do not put $
sign in your answer. Simply write the number in the answer box.

Question 23

Assume interest rate of 6%. Suppose that you receive
$97,408 at the end of each year for 4 years. Suppose that this cash
flow starts at the end of the fourth year. Compute the present value.

Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.

Question 24

Say, you deposit $4,381 in a bank for 16 years. What is the amount you
will have in the bank at the end of 16 years if interest of 4 % for first
7 years and interest of 6 % for the remaining years? Note: Do not put $
sign in your answer. Simply write the number in the answer box.

Question 25

If you can triple your money in 20 years, what is the implied
rate of interest? Note: Do not put % sign in your answer. Simply write the
number in percentages in the answer box..

Question 26

What is the effective rate of 16% compounded monthly?

Do not enter the symbol % in your answer.
Simply enter the answer in percentages rounded off to two decimal points.

Question 27

How much do you need to invest today in order to have $1,829 at
the end of 7 years if you are sure to earn an interest at the rate of 14%,
if interest is compounded monthly? Note: Do not put $ sign in your answer.
Simply write the number in the answer box.

Question 28

The ABC Company is considering a new project which will
require an initial cash investment of $12,842. The projected cash flows
for years 1 through 4 are $6,128, $5,264, $8,811, and $4,632,
respectively. If the appropriate discount rate is 12%, compute the NPV of
the project.

Enter your answer rounded off to two
decimal points. Do not enter $ in the answer box.

Question 29

The Perpetual Life Insurance Co is trying to sell you an
investment policy that will pay you and your heirs $14,536 per year
forever. Suppose the Perpetual Life Insurance Co. told you the policy
costs $169,503. At what interest rate would this be a fair deal? Just
enter the number in percentages up to 2 decimal points. Do not
enter % in the answer box.

Question 30

How many months it will take to grow your money from $3,711 to
$6,515 if you can earn an interest of 19% compounded monthly? Note: Do not
write “months” in your answer. Simply write the number in the
answer box.

Question 31

How many years it will take to grow your money from $4,118 to
$6,536 if you can earn an interest of 6% compounded monthly? Note: Do not
write “years” in your answer. Simply write the number in the
answer box.

Question 32

If you receive $274 at the end of each year for the first three
years and $956 at the end of each year for the next three years. What is
the present value? Assume interest rate is 7%.

Hint: This is an uneven cash flow problem.
Use the CF function and solve for NPV to get the answer.
Just enter the number up to 2 decimal
points. Do not enter $ in the answer box.

Question 33

Consider a 10-year loan with monthly payments at 10%. If the
loan amount is $250,000, compute the Interest paid during the 6th
year.

Enter your answer rounded off to two
decimal points. Do not enter $ in the answer box.

Question 34

Assume interest rate of 4%. A company receives cash flows of
$559 at the end of year 5, $242 at the end of year 7, and $962 at the
end of year 10. Compute the future value of this cash flow stream.

Do not enter the symbol $ in your answer.
Simply enter the answer rounded off to two decimal points.

Question 35

If you put $700 in a savings account with a 10% nominal rate of
interest compounded monthly, what will the investment be worth in 21
months (round to the nearest dollar)?

a.

$828

b.

$770

c.

$833

d.

$1,176

e.

$827

Question 36

The ABC Company is considering a new project which will
require an initial cash investment of $5,268. The project will produce no
cash flows for the first 5 years. The projected cash flows for
years 6 through 9 are $6,362, $4,627, $4,076, and $6,748,
respectively. If the appropriate discount rate is 4%, compute the NPV of
the project.