FINANCE: ASSIGNMENT QUESTIONS

CONNECT Textbook, page 168

10. Calculating Present Values - Normandi Inc. Has an unfunded pension liability of $575 million that must be paid in 20 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 6.8%, what is the present value of this liability?

11. Calculation Present Values - You have just received notification that you have won the $1 million first prize in Lamarche lottery. However, the price will be awarded on your 100th birthday (assuming you're around to collect). 80 years from now. What is the present value of your withdrawal if the appropriate discount rate is 9%

12. Calculating Future Values - Your coin collection contains fifty 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2060, assuming they appreciate at 4.1% annual rate

13. Calculating Interest Rates and Future Values - In 1970, the price money of the Canadian Open Tennis Tournament was $15, 000. In 2015, the price money was $3,776,270. What was the precentage increase in the prize money over this period? If the winner's prize continues to increase at the same rate, what will it be in 2040?

14. Calculating Present Values - The first comic book featuring Superman was sold in 1938. In 2014, this comic book was sold for $3.2 million on eBay. This presented a return of 25.53% per year. For this to be true, what must the comic book have sold for when new?

15. Calculating Rates of Return. - Although appealing to more refine tastes, art as a collectibe has not always performed so profitably. During 2003, Sothebys sold the Edgar Degas bronze sculpture Petite Danseuse de Quartorze Ans at auction for a price of $10,311,500. Unfornutately, for the previous owner, he had purchased it in 1999 at a price of $12, 3777,500. What was his annual rate of return on this sculpture?