What is an opportunity cost rate? How is this rate used in discounted cash flow analysis, and where is it shown on a time line? Is the opportunity rate a single number that is used all situations?
Would you rather have a savings account that pays 5% interest compounded semiannually or one that pays 5% interest compounded daily? Explain
If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?
What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?
What is the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If thiswere an annuity due, what would its future value be?
An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 8% annually, what is this investment's present value? Its future value?
You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 12%, with interest paid monthly. What is the monthly loan payment? What is the loan's EFF%?