Reference no: EM133030485

Questions -

Q1. A company's 2005 sales were $10 million. If sales grow at 8% per year, how large will they be in 8 years?

Q2. Suppose a government bond will pay $1,000 three years from now. If the going interest rate on 3-year government bonds is 4%, how much is the bond worth today?

Q3. The bank offers to sell you a bond for $613.81. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?

Q4. Nike corporation earnings per share in 2005 were $4, and its growth rate during the prior 5 years was 9% per year. If that growth rate were maintained, how long would it take for Nike's earnings per share to double?

Q5. You have a chance to buy an annuity that pays $1,000 at the end of each year for 5 years. You could earn 6% on your money in other investments with equal risk. What is the most you should pay for the annuity?

Q6. Suppose you inherited $200,000 and invested it at 6% per year. How much could you withdraw at the end of each of the next 15 years?

Q7. You are buying your first house for $220,000, and are paying $30,000 as a down payment. You have arranged to finance the remaining $190,000 30-year mortgage with a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make?

Q8. Suppose you have to invest $15,000 at an interest rate of 3.5% (compounded quarterly) for a period of 5 years. What will be the value of your investment at the end of 5 years?

Q9. You have $900 to invest today. In how many years will it double if you invest it at an interest rate of 11% compounded annually?

Q10. Suppose you want to buy a home after 3 years and you will need $15,000 for that. You open a savings account and deposit a lump sum amount of $2,000. You want to make a monthly payment at an interest rate of 4.5%. What should be the constant monthly payment you should make to reach the goal of $15,000 after 3 years?

Q11. You are planning for an early retirement, so you decide to invest $5,000 per year, starting at age 23. You plan to retire when you accumulate $1,000,000. If the average rate of return on your investments is 8%, which formula in B4 will allow you to determine how many years you must invest?