Question: 1 How much would $5,000 due in 25 years be worth today if the discount rate were 5.5%? 2. Ten years ago, Lucas Inc. earned

1 How much would $5,000 due in 25 years be worth today if the discount rate were 5.5%?

2. Ten years ago, Lucas Inc. earned $0.50 per share. Its earnings this year were $2.20. What was the growth rate in earnings per share (EPS) over the 10-year period?

3. Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?

4. As a result of compounding, the effective annual rate on a bank deposit (or a loan) is always equal to or less than the nominal rate on the deposit (or loan).

True or False

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