1. Fahim just hit the jackpot in Las Vegas and won $45,000! If he invests it now at a 14% interest rate, how much will it be worth 20 years from now?
2. Marc would like to have $2,500,000 saved by the time he retires 40 years from now. How much does he need to invest now at a 14% interest rate to fund his retirement goal?
3. Assume that Magda accumulates savings of $1.5 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 15 years?
4. Hannah plans to invest $2,500 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 12% interest rate, how much would Xuzhi have to invest now to be able to withdraw $13,000 at the end of every year for the next nine years?
6. Stefan is considering a capital investment that costs $505,000 and will provide the net cash inflows listed below. Using a hurdle rate of 10%, find the NPV of the investment.
Year Net Cash Inflow
1............................................................................................. $298,000
2............................................................................................. 205,000
3............................................................................................. 96,000
7. What is the IRR of the capital investment described in Question 6?