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##### Financial Questions test

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solution

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Question;Question 1The Perpetual Life Insurance Co is trying to sell you an investment policy that will pay you and your heirs $10,185 per year forever. Suppose the Perpetual Life Insurance Co. told you the policy costs $157,889. At what interest rate would this be a fair deal?Question 4How many years it will take to grow your money from $3,573 to $6,334 if you can earn an interest of 6% compounded monthly?.Question 6Say, you deposit $3,710 in a bank for 19 years. What is the amount you will have in the bank at the end of 19 years if interest of 7 % compounded monthly for first 6 years and interest of 7 % compounded quarterly for the remaining years?Question 8Say, you deposit $1,493 in a bank for 17 years. What is the amount you will have in the bank at the end of 17 years if interest of 7 % for first 10 years and interest of 9 % for the remaining years?Question 9If you can triple your money in 9 years, what is the implied rate of interest?Question 11Barrett Pharmaceuticals is considering a drug project that costs $176,677 today and is expected to generate end-of-year annual cash flows of $13,721, forever. At what discount rate would Barrett be indifferent between accepting and rejecting the project?Question 12If you can double your money in 27 years, what is the implied annual rate of interest, given that compounded in quarterly? Note: give your answer in percentagesQuestion 13How 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%?Question 15Kelly starting setting aside funds 10 years ago to buy some new equipment for her firm. She has saved $6,880 each quarter and earned an average rate of return of 10 percent. How much money does she currently have saved for this purpose?Question 17If the effective rate is 7%. 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 18How many months it will take to grow your money from $3,280 to $6,112 if you can earn an interest of 16% compounded monthly?Question 19What is the future value of $7,514 for 12 years at 7 percent if interest is compounded semi-annually?Question 20What is the future value of $846 invested for 23 years at 10% if interest is compounded semi-annually?Question 21In 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.Question 24Assume interest rate of 8%. A company receives cash flows of $653 at the end of year 5, $357 at the end of year 7, and $687 at the end of year 10. Compute the future value of this cash flow stream.Question 25How much do you need to invest today in order to have $7,134 at the end of 27 years if you are sure to earn an interest at the rate of 13%, if interest is compounded monthly?Question 26Assume interest rate of 3%. Suppose that you receive $116,007 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.Question 27How many years it will take you to double your money if you can earn 6% each year, given that compounding is quarterly?Question 28The ABC Company is considering a new project which will require an initial cash investment of $6,421. The project will produce no cash flows for the first 5 years. The projected cash flows for years 6 through 9 are $5,851, $6,099, $6,421, and $4,150, respectively. If the appropriate discount rate is 7%, compute the NPV of the project.Question 29What is the future value of annual payments of $5,016 for 14 years at 4 percent?Question 30What is the future value of $959 invested for 9 years at 13% if interest is compounded quarterly?Question 31What is the future value of $492 invested for 25 years at 16% if interest is compounded semi-annually (twice a year)?Question 32How much do you need to invest today in order to have $247 at the end of 17 years if you are sure to earn an interest at the rate of 7%, if interest is compounded quarterly?Question 33What should you be willing to pay in order to receive $549 annually forever, if you require 5% per year on the investment?Question 35What is the future value of quarterly payments of $518 for 14 years at 4 percent?Question 36How many years it will take to grow your money from $4,916 to $6,290 if you can earn an interest of 19% compounded quarterly?

Paper#49373 | Written in 18-Jul-2015

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