Present Value Of An Investment Be The Highest Assuming The Same Annual Interest Rate

te: It is recommended that you save your response as you complete each question.

Question 1 (1 point)

 

Underwhich of the following discounting methods will the present value of aninvestment be the highest, assuming the same annual interest rate?

Question 1 options:

Yearly

Monthly

Continuous

Quarterly

Question 2 (1 point)

 

Future value:Larry James is planning to invest $25,400 today in a mutual fund thatwill provide a return of 0.10 each year.  What will be the value of theinvestment in 10 years?

Your Answer:Question 2 options:

Answer

Question 3 (1 point)

 

Which of the following is a similar concept to the compound growth rate of money?

Question 3 options:

The discount rate on a capital budgeting project.

The internal rate of return on an investment.

The yield on a bond.

All of the above.

Question 4 (1 point)

 

Youplan to buy a new car. The price is $30,000 and you will make a downpayment of $4,000. Your annual interest rate is 10% and you intend topay for the car over five years. What will be your monthly payment?

Question 4 options:

$552.42

$566.67

$637.41

$433.33

Question 5 (1 point)

 

StanleyRoper has $2,500 that he is looking to invest. His brother approachedhim with an investment opportunity that could give Patrick $4,800 in 4years. What interest rate would the investment have to yield in orderfor Stanley’s brother to deliver on his promise? (Answer needs to bestated as a decimal. For example:  .1089)

Your Answer:Question 5 options:

Answer

Question 6 (1 point)

 

ChuckBrown will receive from his investment cash flows of $3,125 $3,470, and$3,850 at the end of years 1, 2 and 3 respectively. If he can earn 7.5percent on any investment that he makes, what is the future value of hisinvestment cash flows at the end of three years? (Round to the nearestdollar.)

Your Answer:Question 6 options:

Answer

Question 7 (1 point)

 

Yourbrother has asked you to help him with choosing an investment. He has$7,500 to invest today for a period of two years. You identify a bank CDthat pays an interest rate of 0.0500 with the interest being paidquarterly. What will be the value of the investment in two years?

Your Answer:Question 7 options:

Answer

Question 8 (1 point)

 

Youare evaluating a growing perpetuity product from a large financialservices firm. The product promises an initial payment of $21,000 at theend of this year and subsequent payments that will thereafter grow at arate of 0.04 annually. If you use a discount rate of 0.10 forinvestment products, what is the present value of this growingperpetuity?

Your Answer:Question 8 options:

Answer

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