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4-1 If you Invest $500 today in an account that pays 6 percent interest compounded annually how much will be in your account after two years?
4-11 What is the present value of a perpetuity of $280 per year if the appropriate discount rate is 7 percent? What would happen to the present value of the
perpetuity if the appropriate rate rose to 14 percent?
4-13 Find the present value of $500 due in five years if the investment earns 12 percent compounded (a) annually (b) semiannually and (c) monthly.
4-15 Hilda invested $5000 four years ago. If the investment is now worth $7058 what rate of return has Hilda earned on her investment? Assume that interest
is compounded annually.
4-17 Your broker offers to sell you a note for $13250 that will pay $2345.05 per year for 10 years. If you buy the note what rate of interest (to the
closest percent) will you be earning?
4-19 Allison wants to pay off her existing automobile loan. Two years ago Allison borrowed $35600with terms that required her to make monthly payments equal
to $739 for a period of five years. The interest rate on the loan is 9 percent. To the nearest dollar how much does Allison currently owe on her automobile
loan? The most recent payment on the loan was made yesterday.
4-20 If the appropriate interest rate is 8 percent what are the present values of the following cash flow streams?
YEAR_________________Cash Stream A____________________Cash Stream B
1 $100 $300
2 400 400
3 400 400
4 300 100