1. How many years it will take you to double your money if you can earn 5% each year, given that compounding is
quarterly? Note: Do not write “years” in your answer. Simply write the number in the answer box.
2. 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.
3. The ABC Company is considering a new project which will require an initial cash investment of $13,248. The
projected cash flows for years 1 through 4 are $9,734, $9,362, $8,528, and $5,772, respectively. If the
appropriate discount rate is 11%, compute the NPV of the project.
4. What is the future value of annual payments of $5,016 for 14 years at 4 percent?
5. Assume interest rate of 13%. A company receives cash flows of $969 at the end of year 5, $385 at the end of
year 7, and $389 at the end of year 10. Compute the future value of this cash flow stream.
6. If you can triple your money in 27 years, what is the implied rate of interest? Note: Do not put % sign in your
answer.
7. What is the future value of $564 invested for 18 years at 12% if interest is compounded semi-annually? Note: Do
not put $ sign in your answer.
8. What is the effective rate of 10% compounded monthly?
9. Say, you deposit $4,382 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 5 % compounded monthly for first 7 years and interest of 8 % compounded quarterly for the
remaining years?
10. If you can double your money in 13 years, what is the implied annual rate of interest, given that compounded in
quarterly?
11. If you receive $308 at the end of each year for the first three years and $619 at the end of each year for the next
three years. What is the present value? Assume interest rate is 5%.
Hint: This is an uneven cash flow problem. Use the CF function and solve for NPV to get the answer.
12. What is the future value of quarterly payments of $562 for 14 years at 6 percent?
13. What is the future value of $11,866 for 9 years at 9 percent if interest is compounded semi-annually?
14. The ABC Company is considering a new project which will require an initial cash investment of $5,753. The
project will produce no cash flows for the first 5 years. The projected cash flows for years 6 through 9 are
$3,730, $4,568, $2,018, and $3,118, respectively. If the appropriate discount rate is 12%, compute the NPV of
the project.
15. If the effective rate is 11%. What is the nominal rate if compounding is daily?
16. 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?
17. If you can double your money in 29 years, what is the implied annual rate of interest, given that compounded
semi-annually?
18. How much do you need to invest today in order to have $5,268 at the end of 16 years if you are sure to earn an
interest at the rate of 5%?19. 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)?
1. A) $827 / B) $770 / C) $833 D) $828 E) $1,176
20. What is the future value of $2,348 invested for 15 years at 13% if interest is compounded quarterly?
21. Kelly starting setting aside funds 8 years ago to buy some new equipment for her firm. She has saved $6,280
each quarter and earned an average rate of return of 4 percent. How much money does she currently have
saved for this purpose?
22. 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.
23. How many years it will take to grow your money from $4,503 to $7,232 if you can earn an interest of 17%
compounded monthly?
24. How much do you need to invest today in order to have $3,763 at the end of 27 years if you are sure to earn an
interest at the rate of 11%, if interest is compounded quarterly?
25. How much do you need to invest today in order to have $4,507 at the end of 28 years if you are sure to earn an
interest at the rate of 10%, if interest is compounded monthly?
26. What is the future value of $1,103 invested for 24 years at 11% if interest is compounded semi-annually (twice a
year)?
27. Barrett Pharmaceuticals is considering a drug project that costs $185,689 today and is expected to generate
end-of-year annual cash flows of $11,781, forever. At what discount rate would Barrett be indifferent between
accepting and rejecting the project?
28. What should you be willing to pay in order to receive $655 annually forever, if you require 6% per year on the
investment?
29. How many years it will take to grow your money from $3,153 to $8,775 if you can earn an interest of 6%
compounded quarterly?
30. Today, you are purchasing a $1,746 13-year car loan at 7 percent. You will pay annually at the end of each year.
What is the amount of each payment?
31. Assume interest rate of 3%. Suppose that you receive $91,917 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.
32. The Perpetual Life Insurance Co is trying to sell you an investment policy that will pay you and your heirs
$10,113 per year forever. Suppose the Perpetual Life Insurance Co. told you the policy costs $179,869. At what
interest rate would this be a fair deal?
33. Say, you deposit $1,680 in a bank for 18 years. What is the amount you will have in the bank at the end of 18
years if interest of 4 % for first 8 years and interest of 10 % for the remaining years?
34. How many years it will take you to quadruple (means 4 times) your money if you can earn 14.08% each year?
35. 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?
36. Assume interest rate of 3%. A company receives cash flows of $86,130 at the end of years 4, 5, 6, 7, and 8, and
cash flows of $280,548 at the end of year 10. Compute the future value of this cash flow stream.