Finance 3220 Problem Set 1

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What is the present value of $150,000 to be received 8 years from today if the discount rate is 11 percent?  Question 1 options:
| A)|  $65,088.97|
| B)|  $71,147.07|
| C)|  $74,141.41|
| D)|  $79,806.18|
| E)|  $83,291.06
 |
Question 2 (2 points)
 
 According to the Rule of 72, you can do which one of the following?  Question 2 options:
| A)|  double your money in five years at 7.2 percent interest| | B)|  double your money in 7.2 years at 8 percent interest| | C)|  double your money in 8 years at 9 percent interest| | D)|  triple your money in 7.2 years at 5 percent interest| | E)|  triple your money at 10 percent interest in 7.2 years | Question 3 (2 points)

 
 On your ninth birthday, you received $300 which you invested at 4.5 percent interest, compounded annually. Your investment is now worth $757. How old are you today?  Question 3 options:
| A)|  age 29|
| B)|  age 30|
| C)|  age 31|
| D)|  age 32|
| E)|  age 33|
Question 4 (2 points)
 
 You just received a $5,000 gift from your grandmother. You have decided to save this money so that you can gift it to your grandchildren 50 years from now. How much additional money will you have to gift to your grandchildren if you can earn an average of 8.5 percent instead of just 8 percent on your savings?  Question 4 options:

| A)|  $47,318.09|
| B)|  $52,464.79|
| C)|  $55,211.16|
| D)|  $58,811.99|
| E)|  $60,923.52
 |
Question 5 (2 points)
 
 Shelley won a lottery and will receive $1,000 a year for the next ten years. The value of her winnings today discounted at her discount rate is called which one of the following?  Question 5 options:

| A)|  single amount|
| B)|  future value|
| C)|  present value|
| D)|  simple amount|
| E)|  compounded value
 |
Question 6 (2 points)
 
 Andy deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually. Barb...
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