Scribd
Upload
161 views3 pages

Tutorial 2

This document provides a tutorial on introductory finance principles with 20 multiple choice or calculation questions. Some key topics covered include present and future value of cash flows, compound interest, annuities, loans, bonds, and investment returns. The questions calculate values like interest rates, payment amounts, investment balances, and present values using common finance formulas.

Uploaded by

jhagantini
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
161 views3 pages

Tutorial 2

This document provides a tutorial on introductory finance principles with 20 multiple choice or calculation questions. Some key topics covered include present and future value of cash flows, compound interest, annuities, loans, bonds, and investment returns. The questions calculate values like interest rates, payment amounts, investment balances, and present values using common finance formulas.

Uploaded by

jhagantini
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

PRINCIPLES OF FINANCE | Tutorial

Tutorial 1: Introduction to Finance

1. The present value of $1,000 to be received in 5 years is ________ if the


discount rate is 12.78%. C) $548
2. At what rate must $287.50 be compounded annually for it to grow to
$650.01 in 14 years? 6%
3. What is the present value of $11,463 to be received 7 years from today?
Assume a discount rate of 3.5% compounded annually and round to the
nearest $1. $9,010
4. How much money must be put into a bank account yielding 6.42%
(compounded annually) in order to have $1,671 at the end of 11 years
(round to nearest $1)? $843
5. Biff deposited $9,000 in a bank account, and 10 years later he closes out
the account, which is worth $18,000. What annual rate of interest has he
earned over the 10 years? 7.18%

6. How much money do I need to place into a bank account that pays a
1.08% rate in order to have $500 at the end of 7 years? $463.78
7. You borrow $30,000 and agree to pay it off with one lump sum payment of $40,000 in 6 years.
What annual rate of interest will you be charged?Answer: 4.91%

8. What is the present value of an annuity of $4,000 received at the beginning of each year for
the next eight years? The first payment will be received today, and the discount rate is 9%
$24,132

9. What is the present value of an annuity of $120 received at the end of each year for 11 years?
Assume a discount rate of 7%. The first payment will be received one year from today (round
to nearest $1). $900
10. Charlie wants to retire in 15 years, and he wants to have an annuity of $50,000 a year for 20
years after retirement. Charlie wants to receive the first annuity payment the day he retires.
Using an interest rate of 8%, how much must Charlie invest today in order to have his
retirement annuity (rounded to nearest $10)? $167,130

11. If you put $10 in a savings account at the beginning of each month for 15 years, how much
money will be in the account at the end of the 10 th year? Assume that the account earns 12%
compounded monthly and round to the nearest $1. $5,046

12. How much money must you pay into an account at the end of each of 20 years in order to
have $100,000 at the end of the 20th year? Assume that the account pays 6% per year, and
round to the nearest $1. $2,718
13. You are going to pay $100 into an account at the beginning of each of the next 40 years. At the
beginning of the 41st year you buy a 30 year annuity whose first payment comes at the end of
the 41st year (the accounts earn 12%). How much will you receive at the end of the 41 st year
PRINCIPLES OF FINANCE | Tutorial

(i.e., the first annuity payment). Round to nearest $100. $10,700


14. You have contracted to buy a house for $250,000, paying $30,000 down and taking out a fully
amortizing loan for the balance, at a 5.7% annual rate for 30 years. What will your monthly
payment be if they make equal monthly installments over the next 30 years (to the nearest
dollar)? $1,277
15. How much would you be willing to pay (rounded to the nearest dollar) for a 20-year annuity
due if the payments are $4,500 per year and you want to earn a rate of return equal to 5.5%
per year? $56,734
16. A bond will pay $5,000 at maturity in 9 years. It also makes semiannual interest payments of
$400 until maturity. If the discount rate is 7% compounded semiannually, what should be the
market price of the bond? $7,967.68
17. Today is your 20th birthday and your bank account balance is $25,000. Your account is
earning 6.5% interest compounded semiannually. How much will be in the account on your
50th birthday? $170,351

18. If you invest $750 every six months at 8 percent compounded semiannually, how much
would you accumulate at the end of 10 years? $22,334
19. If you put $10,000 in an investment that returns 11 percent compounded monthly what
would you have after 10 years (rounded to nearest $1)? $29,892

20. You want $20,000 in 5 years to take your spouse on a second honeymoon. Your investment
account earns 7% compounded semiannually. How much money must you put in the
investment account today? $14,178
PRINCIPLES OF FINANCE | Tutorial

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy