Exam 1. 1. Future Value=2000, Present Value=1000, Time=13, Compoundings p.y =12, solve for interest rate. a. 12 2000 1000 3.12 3.12 12 2000 1000 -1 1 13.12 b.12 2000 1000 3.12 -1 c.12 2000 1000 -1 d. 2. Future Value=3000, Present Value=1000, interest rate=8%, Compoundings p.y =365, solve for 3. 4. 5. 6. Time. In 3000 1000 In 3000 1000 3000 3000 In ( In 1000 1000 a. b. C. d. 365* 1+.08 365* In ( -). 365* In* (1+ 365 .08 365 365* In (1+ .08 .08 In (1+ 365 365 Future Value=1175, Present Value=1100, interest-5%, Compoundings p.y =1, solve for Time. a) 1.35 b) .0135 c) .014 d) error Future Value=20,000, Present Value=1000, interest-4%, Compoundings p.y =365, solve for Time. a) 27337.55 b) 74.89 c) .7489 d) 12.09 Future Value=800, Present Value=200, Time=20, Compoundings p.y =2, solve for interest rate. a) .0353 b) .0705 c) .0175 d) .0425 Future Value=2000, Present Value=1200, Time=10, Compoundings p.y =365, solve for interest rate. a) .102 b) .014 c) .0102 d) .0511 7. What is the present value of a bond that has a 100 dollar payment, 10 percent market interest rate, 1000 face value, and 10 year maturity? a. 385.54 b. 1000 c. 614.46 d. 1385.54 8. What is the present value of a bond that has a 80 dollar payment, 12 percent market interest rate, 1000 face value, and 20 year maturity? a. 701.22 b. 597.55 c. 103.66 d. 1000 9. For what reason do you use a coupon interest rate on a bond? a. To discount cash flows b. to calculate face value payments c. you don't d. to calculate 10. You have cash flows of 10 20 and 30 (for years 1, 2, and 3) the project costs 38 dollars, what is the NPV if you discount at 10%? a. 48.16 b. -38 c. 48.97 d. 10.16 11. You have cash flows of 58 and 4 (for years 1, 2, and 3) the project costs 12 dollars, what is the NPV if you discount at 12%? a. 13.69 b. -13.89 c. 1.68 d.-1.68