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Homework answers / question archive / Question 1 10 / 10 pts If you invest $100 at an interest rate of 12%, how much will you have at the end of six years? (round to nearest whole dollar) Question 2 10 / 10 pts If the cost of capital is 10%, what is the present value of $450 paid in year 8? (round to nearest whole dollar) Question 3 10 / 10 pts ABC Co's stock will pay a cash dividend of $3

Question 1

10 / 10 pts

If you invest $100 at an interest rate of 12%, how much will you have at the end of six years? (round to nearest whole dollar)

10 / 10 pts

If the cost of capital is 10%, what is the present value of $450 paid in year 8? (round to nearest whole dollar)

10 / 10 pts

ABC Co's stock will pay a cash dividend of $3.50 next year. After that, the dividends are expected to increase indefinitely at 4% per year. If the Company's discount rate is 12%, what should the stock price be? (round to nearest cent - 2 decimals)

10 / 10 pts

You are quoted an interest rate of 5.5% on an investment of $10 million. What is the value of your investment after five years? (answer in millions. round to 1 decimal)

10 / 10 pts

A new piece of equipment costs $350,000 and is expected to produce the following cash flows

Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |

Cash flow ($000s) | 50 | 57 | 75 | 80 | 85 | 92 | 92 | 80 | 68 | 50 |

If the cost of capital is 14%, what is the NPV of the equipment? (round to the nearest whole dollar)

10 / 10 pts

Your grandfather is 70 years of age and has a life expectancy of 18 more years. He wishes to invest $15,000 in an annuity that will make a level payment at the end of each year until his death. If the expected interest rate is 7.5%, what income can your grandfather expect to receive each year? (round to the nearest whole dollar)

10 / 10 pts

As winner of a recruiting competition, you can choose one of the prizes given below. If the interest rate is 10%, which prize do you think is worth the most?

10 / 10 pts

How much would you have to deposit today to be able to withdraw $500 each year for the next 10 years from an account that earns 8 percent a year? (round to nearest whole dollar)

10 / 10 pts

You are planning to go to law school and the program is three years long. You want to have $8,000 a year to spend for school and living expenses. If you can earn 4%, how much should you deposit at the beginning of law school to be able to withdraw $8,000 for each of the three years? (round to nearest whole dollar)

10 / 10 pts

In 2016, the average price of a house was $275,000. 6 years earlier, the average price was $210,000. What was the annual increase in selling price? (round to 1 decimal place)

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