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Question 1
1. Calculate the future value of $5,000 invested today for 6 years if your investment pays 4% compounded annually
2. Calculate the present value of $3,000 received 8 years from today if your investment pays 6% compounded semi- annually.
3. Calculate the future value of an annuity stream that pays $2,000 every year for 5 years on the last day of each year if your investment pays 10% compounded semi annually?
4. Calculate the present value of an annuity stream that pays $50,000 every year for 5 years on the last day of each year if your investment pays 12% compounded quarterly?
Question 2.
Assume a two-stock portfolio with $40,000 invested in Aramex Company and $60,000 invested in DHL Company.
Estimated Return
Economy
Probability
Aramex (ri)
DHL(ri)
Portfolio(ri)
Strong
0.30
15%
25%
12%
Normal
0.50
10%
13%
Weak
0.20
-8%
-15%
-7%
Total
1.00
Question 3
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