FINA Module 5 - Time Value of Money P2

Your parents are giving you $150 a month for 5 years while you are in college. At a 6 percent discount rate,what are these payments worth to you when you first start college?

 

$7,758.83

You are scheduled to receive annual payments of $10,100 for each of the next 23 years. Your discount rate is10 percent. What is the difference in the present value if you receive these payments at the beginning ofeach year rather than at the end of each year?

$8,972

You borrow $5,830 to buy a car. The terms of the loan call for monthly payments for 6 years a rate ofinterest of 7 percent. What is the amount of each payment?

$99.40

The Good Life Insurance Co. wants to sell you an annuity which will pay you $770 per quarter for 25 years. You want to earn a minimum rate of return of 6.2 percent. What is the most you are willing to pay as a lumpsum today to buy this annuity?

$39,007.37

Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of$6,000, $11,000, and $17,200 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return of 14 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?

$25,336.81

You just paid $342,000 for a policy that will pay you and your heirs $11,400 a year forever. What rate of return are you earning on this policy?

3.33%

Mr. Miser loans money at an annual rate of 12 percent. Interest is compounded daily. What is the actual rateMr. Miser is charging on his loans?

12.75%

Suppose the first comic book of a classic series was sold in 1954. In 2015, the estimated price for this comic book in good condition was about $310,000. This represented a return of 22 percent per year. For this to be true, what was the original price of the comic book in 1954?

$1.67

You want to buy a new sports car from Muscle Motors for $54,000. The contract is in the form of a 36-monthannuity due at a 8.25 percent APR.  

Required: What will your monthly payment be?

$1,686.80

Suppose you are buying your first condo for $145,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

$821.69