Week 12 Assignment Multiple Choice 1. 2. what is the future value for a lump sum

Question

Week 12 Assignment Multiple Choice 1. 2. what is the future value for a lump sum of $6000 invested at 3% for five years? What is present value for a lump sum of $15,000 to be received in eight years when the opportunity cost rate is 4%? 3. what is the future value for a lum p sum of $2000 invested at 8% compounded quarterly or five years. Note-this is equivalent to 2% per period for 20 periods such that f(in) 0.02,20) on Table 18-1. 4. What is the present value of a perpetuity of $25,000 a year if the appropriate discount rate is 6%? 5. what is the effective annual rate (EAR) if the stated rate is 12% and compounding occurs monthly? 6. what is the future value of an annuity paying $2,000 annually at 5% interest for 30 years? 7. What is the present value of an annuity paying S 1,000 annually at 3% interest for 10 years? 8. Alpha Clinic is considering spending $7.5 million on the latest technology in medical imaging in anticipation of the following cash flow: Year Cash Flow 1($7,500,000) 2 $1,200,000

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

1)

Future value

= Present value x (1 + r) ^ n

Where,

Present value = $6,000

r = Interest rate = 3% or 0.03

n = Number of years = 5

So, Future value

= $6,000 x (1.03 ^ 5)

= $6,000 x 1.159274

= $ 6,955.64

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