5. 

Ambrin Corp. expects to

receive $2,000 per year for 10 years and $3,500 per year for the next 10 years.

What is the present value of this 20 year cash flow? Use an 11% discount

rate. 

10. 

Joe Nautilus has $210,000

and wants to retire. What return must his money earn so he may receive annual

benefits of $30,000 for the next 10 years? 

6. 

Dr. J. wants to buy a Dell

computer which will cost $3,000 three years from today. He would like to set

aside an equal amount at the end of each year in order to accumulate the amount

needed. He can earn 8% annual return. How much should he set aside? 

8. 

Mike Carlson will receive

$12,000 a year from the end of the third year to the end of the 12th year . The discount rate is 10%. The present value today of this deferred

2. 

Lou Lewis borrows $10,000

to be repaid over 10 years at 9 percent. Repayment of principal in the first

year is: 

John Doeber borrowed

$150,000 to buy a house. His loan cost was 6% and he promised to repay the loan

in 15 equal annual payments. What is the principal outstanding after the first

loan payment? 

4. 

Pedro Gonzalez will invest

$5,000 at the beginning of each year for the next 9 years. The interest rate is

8 percent. What is the future value? 

1. Mr. Nailor invests $5,000

in a money market account at his local bank. He receives annual interest of 8%

for 7 years. How much return will his investment earn during this time

period? 

7. 

Mr. Fish wants to build a

house in 8 years. He estimates that the total cost will be $150,000. If he can

put aside $10,000 at the end of each year, what rate of return must he earn in

order to have the amount needed? 

9. 

Mr. Darden is selling his

house for $200,000. He bought it for $164,000 ten years ago. What is the annual

return on his investment?