Finance Questions
Sarah Wiggum would like to make a single investment and have $1.6 million at the time of her retirement in 35 years. She has found a retirement fund that will earn 4% annually. How much will Sarah have to invest today? If she earned an annual return of 18%, how soon could she then retire?
How many years will it take for $500 to grow to $1,051.82 at 10% compounded annually?
What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of one year and grows at a rate of 7% indefinitely? The rate of interest used to discount the cash flows is 9%. What is the present value of the growing perpetuity?
To pay for your education you have taken out $28,000 in student loans. If you make monthly payments over 13 years at 6% compounded monthly, how much are your monthly student loan payments?
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
End of year A B C
1 $ 1,000 $ 1,000 $ 5,000
2 2,000 1,000 5,000
3 3,000 1,000 (5,000)
4 (4,000) 1,000 (5,000)
5 4,000 3,000 15,000
What is the present value of each if these three investments if the appropriate discount rate is 13%?