Compute the present value of future cash flow

Assignment Help Financial Management

Reference no: EM131596518

1) Jamie earned $180 in interest on her savings account last year. She has decided to leave the $180 in her account so that she can earn interest on the $180 this year. The interest Jamie earns this year on this $180 is referred to as:

a) simple interest.

b) complex interest.

c) accrued interest.

d) interest on interest.

e) discounted interest.

2) The interest rate used to compute the present value of a future cash flow is called the:

a) prime rate.

b) current rate.

c) discount rate.

d) compound rate.

e) simple rate.

3) Ten years from now, you will be inheriting $100,000. What is this inheritance worth to you today if you can earn 5.5 percent interest, compounded annually?

a)$58,543.06

b) $63,215.46

c) $72,419.05

d) $72,798.47

e) $74,003.15

4) You have been told that you need $25,600 today in order to have $100,000 when you retire 35 years from now. What rate of interest was used in the present value computation? Assume interest is compounded annually.

a) 3.97 percent

b) 4.15 percent

c) 4.29 percent

d) 4.53 percent

e) 4.58 percent

Reference no: EM131596518

Questions Cloud

Determine what the challenge-problem : Describe in detail, think like a reporter - who, what, when, where, why, etc., a current challenge/problem you are experiencing at your internship.

What is your opinion on thiels framework : What is your opinion on Thiel's framework? Does it make sense to you? Why or why not? Please answer this question in a business context.

What are the monthly payments-negative amortizing loan : What are the monthly payments if it is a negative amortizing loan and the loan balance will be $75,000 at the end of year 20?

Discuss the break-even analysis techniques : Return on investment (ROI) and break-even analysis are used by businesses to determine the value of a proposed investment or make decisions.

Compute the present value of future cash flow : The interest rate used to compute the present value of a future cash flow is called the:

What are some real or potential applications : Critically reflect on the importance of present and future values. What are some real or potential applications of these concepts

Explain how each item on checklist helps evaluate a study : Explain how each item on checklist helps evaluate a study. Checklist should be clearly worded. A person using it should not have to ask for an explanation.

His investment account each month to reach his goal : How much would your friend have to put in his investment account each month to reach his goal?

Interest-only mortgage-what will the monthly payments be : An “interest-only” mortgage is made for $100,000 at 10 percent interest for 10 years. What will the monthly payments be?

User Account

All Pages