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Question;41. Assume that you own an annuity that will pay you $15,000;per year for 12 years, with the first payment being made today. You need money today to start a new business;and your uncle offers to give you $120,000 for the annuity. If you sell it, what rate of return would;your uncle earn on his investment?;a. 6.85%;b. 7.21%;c. 7.59%;d. 7.99%;e. 8.41%;42. What annual payment must you receive in order to earn a;6.5% rate of return on a perpetuity that has a cost of $1,250?;a. $77.19;b. $81.25;c. $85.31;d. $89.58;e. $94.06;43. What is the present value of the following cash flow stream;at a rate of 6.25%?;Years: 0 1 2 3 4;CFs: $0 $75 $225 $0 $300;a. $411.57;b. $433.23;c. $456.03;d. $480.03;e. $505.30;44. What is the present value of the following cash flow stream;at a rate of 12.0%?;Years: 0 1 2 3 4;CFs: $0 $1,500 $3,000 $4,500 $6,000;a. $9,699;b. $10,210;c. $10,747;d. $11,284;e. $11,849.;45. What is the present value of the following cash flow stream;at a rate of 8.0%?;Years: 0 1 2 3;CFs: $750 $2,450 $3,175 $4,400;a. $7,917;b. $8,333;c. $8,772;d. $9,233;e. $9,695;46. You sold a car and accepted a note with the following cash;flow stream as your payment. What was;the effective price you received for the car assuming an interest rate of 6.0%?;Years: 0 1 2 3 4;CFs: $0 $1,000 $2,000 $2,000 $2,000;a. $5,987;b. $6,286;c. $6,600;d. $6,930;e. $7,277;I/;47. At a rate of 6.5%, what is the future value of the;following cash flow stream?;Years: 0 1 2 3 4;CFs: $0 $75 $225 $0 $300;a. $526.01;b. $553.69;c. $582.83;d. $613.51;e. $645.80;48. Your father paid $10,000 (CF at t = 0) for an investment;that promises to pay $750 at the end of each of the next 5 years, then an;additional lump sum payment of $10,000 at the end of the 5th year. What is the expected rate of return on this;investment?;a. 6.77%;b. 7.13%;c. 7.50%;d. 7.88%;e. 8.27%;49. You are offered a chance to buy an;asset for $7,250 that is expected to produce cash flows of $750 at the end of;Year 1, $1,000 at the end of Year 2, $850 at the end of Year 3, and $6,250 at;the end of Year 4. What rate of return;would you earn if you bought this asset?;a. 4.93%;b. 5.19%;c. 5.46%;d. 5.75%;e. 6.05%;50. What?s the future value of $1,500 after 5 years if the;appropriate interest rate is 6%, compounded semiannually?;a. $1,819;b. $1,915;c. $2,016;d. $2,117;e. $2,223

Paper#51050 | Written in 18-Jul-2015

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