Question

1. George just hit the jackpot in Las Vegas and won $ 55,000! If he invests it now, at a 12% interest rate, how much will it be worth 15 years from now?
2. Zach would like to have $ 4,000,000 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 Olivia accumulates savings of $ 2 million by the time she retires. If she invests this savings at 8%, how much money will she be able to withdraw at the end of each year for 20 years?
4. Audrey plans to invest $ 4,500 at the end of each year for the next seven years. ­Assuming a 10% interest rate, what will her investment be worth seven years from now?
5. Assuming a 10% interest rate, how much would Jessica have to invest now to be able to withdraw $ 9,000 at the end of every year for the next nine years?
6. Christopher is considering a capital investment that costs $ 495,000 and will provide the following net cash inflows:

Year NetCash Inflow
1...................................................................................................... $ 302,000
2...................................................................................................... $ 208,000
3...................................................................................................... $ 98,000
Using a hurdle rate of 8%, find the NPV of the investment.
7. What is the IRR of the capital investment described in Question 6?



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  • CreatedAugust 27, 2014
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