Reference no: EM132986883

Question -

Q1. What is the future value of a five-year ordinary annuity with annual payments of $200, evaluated at a 15 percent interest rate?

Q2. What is the present value of a $100 lump sum to be received in five years if the opportunity cost rate is 10 percent?

Q3. What is the future value of a $100 lump sum invested for five years in an account paying 10 percent interest?

Q4. You buy a six-year, 8 percent savings certificate for $1,000. If interest is compounded annually, what will be its value at maturity?

Q5. You buy a six-year, 8 percent savings certificate for $10,000. If interest is compounded semiannually, what will be its value at maturity? Explain the effect that cause the ending balance to either increase or decrease.

Q6. Discuss the impact on the present value (PV) of a future lump sum as either the discount rate or the number of compounding periods per year increases.

Q7. An investment opportunity promises a stated interest rate of 6 percent, with semiannual compounding. Compute the effective annual rate, and indicate whether or not the EAR is less or greater.