Question : 101.If you deposit $10,000 today in an account that pays : 1325662

 

101.If you deposit $10,000 today in an account that pays 5% interest compounded annually for five years, how much interest will you earn?

a.$2,500.00

b.$2,762.82

c.$3,400.96

d.$12,762.82

102.Mendelson Implements records the following cash flows at the end of each year for a project. If the firm’s discount rate is 11%, what is the value of the project at the end of the last year?

 

YearCash flow

1$794,633

2$542,149

3$836,200

4$716,080

5$520,354

a.$2,547,837

b.$4,200,696

c.$4,293,253

d.$4,657,524

103.Herbilux Botanicals forecasts the following cash flows at the end of each year for a project. If the firm’s discount rate is 9%, what is the present value of the project?

YearCash flow

1$   697,000

2$   631,000

3$   574,000

4$   898,000

5$9,981,000

a.$7,634,980

b.$8,015,517

c.$8,736,914

d.$12,268,998

104.Mendez Implements records the following cash flows at the beginning of each year for a project. If the firm’s discount rate is 11%, what is the value of the project at the end of the last year?

YearCash flow

1$794,633

2$542,149

3$836,200

4$716,080

5$520,354

a.$4,293,253

b.$2,547,837

c.$4,657,524

d.$4,765,511

105.Mayfield Development, LLC forecasts the following cash flows at the beginning of each year for a project. If the firm’s discount rate is 9%, what is the present value of the project?

YearCash flow

1$   697,000

2$   631,000

3$   574,000

4$   898,000

5$9,981,000

a.$7,634,980

b.$8,736,914

c.$9,523,236

d.$12,268,998

106.You’ve just won $1 million dollars in a lottery. For your prize, you may except a $1 million lump sum paid immediately, a constant perpetuity of $80,000 per year (with the first payment arriving in one year), or a stream of cash flows that starts at $45,000 next year and grows at 3.5% per year in perpetuity. If the interest rate is 8%, which of these choices has a higher present value?

a.a $1 million lump sum

b.a constant stream of $80,000 per year in perpetuity

c.a stream that begins at $45,000 and grows at 3.5% in perpetuity

d.all three choices have the same present value

107.A financial advisor recommends saving $1,000,000 for a comfortable retirement. With investment returns of 8%, what is the annual year-end cash flow generated by the $1 million for 25 years, assuming you spend all of the principal and interest?

a.$80,000

b.$86,740

c.$93,679

d.$94,978

108.If you invest $2,500 in a bank account that pays 6% interest compounded monthly, how much will you have in five years?

a.$1,853.43

b.$3,345.56

c.$2,505.20

d.$3,372.13

109.A few years after graduating from college, you decide to get an MBA. This endeavor sets you back $100,000 in loans. Luckily, you have the option to consolidate these loans at 5%. You opt for a 30-year payback period with monthly installments due at the end of each month. What is the monthly payment on the consolidated loan?

a.$536.82

b.$542.10

c.$544.86

d.$3,552.94

110.Your aunt is evaluating her retirement pension. She can retire at age 65 and collect $1,000 per month for the rest of her life. Assume that payments begin one month after her 65th birthday. If your aunt lives to be exactly 80 years old and can earn 7% interest (compounded monthly), what is the equivalent lump sum she would need at retirement to equal the value of the pension?

a.$106,906

b.$111,256

c.$115,313

d.$215,027