1. Merridee just hit the jackpot in Las Vegas and won $25,000! If she invests it now at a 12% interest rate, how much will it be worth in 20 years?
2. Walid would like to have $2,000,000 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 Stephanie accumulates savings of $1 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. Shu-Fan plans to invest $2,000 at the end of each year for the next seven years. Assuming a 14% interest rate, what will the investment be worth seven years from now?
5. Assuming a 6% interest rate, how much would Euna have to invest now to be able to withdraw $10,000 at the end of each year for the next nine years?
6. Devin is considering a capital investment that costs $485,000 and will provide the net cash inflows listed below. Using a hurdle rate of 12%, find the NPV of the investment.
Year Net Cash Inflow
1............................................................................................. $300,000
2............................................................................................. 200,000
3............................................................................................. 100,000
7. What is the IRR of the capital investment described in Question 6?