1. A city would have to borrow $2,500,000 at 8% to finance the construction cost of a new school. This sum would be paid off over a twenty fiver year period. The repayment would be financed out of general revenues, without any tax increase. Thus, other services of the value of the loan repayment would have to be foregone by the city's 200,000 residents. What is the annual, per capita revenue diversion the residents would have to absorb to finance the loan's repayment?
2. You wish to make a down payment on a house at the end of four years. At 12%, what amount must you place in the bank each year to accumulate the $15,000?
3. A nuclear wast storage facility will reduce the health risks in perpetuity, valued in the amount of $800,000 per year. The annual operating costs of the facility are $150,000 in perpetuity. The discount rate is 6%. How high could the initial investment cost be for this investment to have an NPV > 0?
4. You have borrowed $75,000 to be repaid, with interest, in 10 equal yearly installments. If interest on the unpaid balance is assessed at the rate of 8% per year, how large will each year's payment be?
5. The net-profit stream of a business at the end of each of 4 years will be $9,500, $13,500, $11,500, and $13,500. What is the present value of this net-profit stream at 9% and the annual worth each period?