1. What is the present value of a perpetuity of $4,887 if the discount rate is 10.26%?
2. Copy of You have the opportunity to purchase an investment that will generate annual cash flows of $400 per year for the next 9 years and will pay an additional $2,046at the end of 9 years. If your required rate of return on this investment is 9%, how much is the investment worth? State you answer in dollars and cents.
3. How long will it take to double your money at an annually compounded interest rate of 8.4%? State your answer in years to two decimal places.
4. You are considering your retirement, and would like to have accumulated $2,295,734 by the time you retire in 34 years. If you anticipate that your average compounded rate of return over the 34 years until retirement will be 13%, how much will you need to save in your retirement account each year from now until then.
5. If you pay $1,463 for a perpetuity of $135, what is your percent rate of return?
6. Sam was injured in an accident, and the insurance company has offered him the choice of $35,300 per year for 39 years, with the first payment being made today, or a lump sum. If a fair return is 8.85%, how large must the lump sum be to leave him as well off financially as with the annuity? State your answer in whole dollars.