1. Charlie just hit the jackpot in Las Vegas and won $30,000! If he invests it now, at a 14% interest rate, how much will it be worth fifteen years from now?
2. Roderick would like to have $3,000,000 saved by the time he retires in 40 years. How much does he need to invest now at a 10% interest rate to fund his retirement goal?
3. Assume that Penny accumulates savings of $2 million by the time she retires. If she invests this savings at 12%, how much money will she be able to withdraw at the end of each year for fifteen years?
4. Hannah plans to invest $3,000 at the end of each year for the next eight years. Assuming a 14% interest rate, what will her investment be worth eight years from now?
5. Assuming a 6% interest rate, how much would Rachel have to invest now to be able to withdraw $12,000 at the end of every year for the next nine years?
6. Darren is considering a capital investment that costs $500,000 and will provide the following net cash inflows:
Year Net Cash Inflow
1 .......................................................................................................... $308,000
2 .......................................................................................................... $205,000
3 .......................................................................................................... $102,000
Using a hurdle rate of 12%, find the NPV of the investment.
7. What is the IRR of the capital investment described in Question 6?