For problems $1-5,$ use a discount rate of $10\%.$

$1.$ What would be the value of an asset that returns a cash flow of $$1000$ one year from

now?

$2.$ What would be the value of an asset that returns a cash flow of $$1000$ in each of the next

five years starting one year from now?

$3.$ What would be the value of an asset that returns a cash flow of $$100$ in each of the next

five years starting one year from now plus an additional $$1000$ at the end of the fifth

year?

$4.$ What would be the value of an asset that returns a cash flow of $$100$ in each of the next

five years starting one year from now and $$200$ per year in years six through ten?

$5.$ What would be the value of an asset that returns a cash flow of $$100$ each year forever

starting one year from now?

$6.$ If the current value of $$1000$ received five years from now is $$680\mathrm{.}50,$ what is the

assumed annual interest rate?

$7.$ If the current value of $$1000$ received in each of the next five years starting one year

from now is $$3889\mathrm{.}65,$ what is the assumed annual interest rate?

$8.$ $$1000$ is deposited in a bank earning $8\%$ compounded annually. What will be the

balance at the end of ten years? What will be the ending balance assuming money is

compounded quarterly?

$9.$ How much will you accumulate if you invest $$800$ a year for $10$ years at a rate of $8\%$ per

year? How much will you accumulate if $$200$ per quarter is invested at a rate of $8\%$ per

year compounded quarterly?

$10.$ You now have $$20,000$ which can be invested at $9\%$ per year.

a$.$ For how many years can you spend $$2671?$

b$.$ What is the most you can spend per year for the next $20$ years?

c$.$ If you borrowed that $$20,000$ to be paid back over $13$ years at $9\%,$ what are your

annual payments?

d$.$ How much must you save per year for $13$ years at $9\%$ to accumulate $$20,000?$

$11.$ If you invest $$1000$ today, you expect to have $$1460$ at the end of $4$ years. What rate of

return do you expect to earn?

$12.$ Brock Lee decided to sell his stock due to the recent market turbulence and instead put

the entire amount of $$100,000$ into a savings account that promises to pay him annual

compound interest of $4\%.$

a$.$ How much money will Mr$.$ Lee accrue if he leaves it all in the bank for $1,8,$ or $20$

years?

b$.$ If Mr$.$ Lee finds a different bank that promises to pay him $4\%$ per year but

compounds quarterly, rework part $($a$)$ using this new information.

$13.$ If Ginger Rayle was offered $$4,000$ five years from now in return for an investment of

$$1,000$ currently, what annual rate of interest would she earn if she took the offer?

$14.$ When you complete your MBA, you will treat yourself to a new car. The car you want to

buy costs $$25,000$ and you have enough to put $20\%$ down in cash. You can take out a

loan for the rest of the cost of the car. Calculate your monthly car payments assuming the

auto finance department states that the annual interest rate on the car loan is $8\%$ and you

pay the loan over a $3-$year period.