\fQ1. The required return is 10%. What is the present value for the cash flows below? [1 mark] 50 50 50 50 50 50 02. You are considering investing $5,000 in a bank term deposit for 3 years. The term deposit will pay a semi-annual interest of 4% (compounded semi-annually). What is the value of the deposit at the end of year 3? [1 mark] Q3. A perpetuity with a present value of $100,000 today yields quarterly cash ows. If the required return in APR is 8% and the first cash ow comes in one quarter from today. What is the value of the cash ow per quarter? [1 mark] Q4. How long will it take for an investment with an annual rate of return of 6% compounded annually to grow to ten times its current value? [1 mark] Q5. You are anticipating receiving a stream of regular monthly cash flows, with the rst payment of $100 arriving at the end of the rst month. From the second month until the end of the 240th month, the cash inflows will increase by 0.6% per month. The interest rate per month is 1%. What is the future value of these cash inows at the end of the 120th month? [1 mark] Q6. Bilbo plans to save for his retirement in 30 years (t=30) from today, with constant annual saving of $50,000 starting from year 1 (t=l) through year 30 (t=30). Bilbo aims to maintain constant annual expense in the retirement from year 31 (t=3l) to year 50 (t=50). The annual discount rate for Bilbo's entire life is 10%. [2 marks] a) What is the Bilbo's maximum expense per year in his retirement? b) If Bilbo also wants to leave $10,000,000 to his son Frodo in year 50 (t=50), what is his maximum annual expense in the retirement? Q7. Anna wants to buy an insurance plan for her newborn. To purchase the policy. Anna needs to pay make the following payment to the insurance company. 2nd birthday: $700 3rd birthday: $800 4th birthday: $900 5th birthday: $1000 6th birthday: $1100 7th birthday: $1200 No more payment is required after the seventh birthday. The policy will pay Anna's child $300 .000 on her child's 60'\" birthday. If the relevant interest rate is 10% per year and Anna's child will live to 60 years old, is this policy worth buying? Why? [1 mark] Q8. A nancial planner has recommended two investment plans that have the same investment cost. Under Plan A, you will receive a perpetual payment of $20,000 annually, while under Plan B, you will receive an annual payment of $50,000 for 10 years. Both plans will pay out their first installment one year from today. Assuming that the interest rates for both plans are equal, what interest rate would make you indifferent to choosing between the two plans? [Hint The present value of two plans' cash ows should be equal so you will be indifferent between two plat-15.] [2 marks]