1) Suppose you deposit $ 2,000 today and your account will accumulate to $ 4,000 in 10 years. What is the nominal annual rate of interest, given semiannual compounding?
a. 7.18%
b. 3.53%
c. 7.05%
d. 7.00%
e. None of the above
2) HKL Co. plans a new project that will generate $ 170,000 of continuous cash flow each year for 6 years and additionally $ 250,000 at the end of the project. If the continuously compounded rate of interest is 11%, estimate the present value of the cash flows.
a. 875897.13
b. 1170000
c. 1203567.13
d. 1356987.13
e. None of the above