1. What are the three steps in investment analysis?
2. True or False: Investment analysis is concerned with revenues and expenses? Explain your answer.
3. Suppose that two projects each cost $12,000. The first project returns $4,000 per year for 6 years. The second project returns $6,000 per year for 2 years. Which has the better payback period? Are there any issues with this method of analysis?
4. Explain compounding and discounting.
5. How much will $6,000 invested at 5% simple interest be worth if the interest rate is 7%?
6. How much will %5,000 invested at 3% interest be worth in 4 years if it is compounded annually? Quarterly? How much if the interest rate is 6%?