Question Details

What is the present value of the following cash flow stream 



1.	Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today.  You need money today to start a new business, and your uncle offers to give you $120,000 for the annuity.  If you sell it, what rate of return would your uncle earn on his investment?

a.	6.85%
b.	7.21%
c.	7.59%
d.	7.99%
e.	8.41%
	
2.	What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has a cost of $1,250?

a.	$77.19
b.	$81.25
c.	$85.31
d.	$89.58
e.	$94.06
	
3.	What is the present value of the following cash flow stream at a rate of 6.25%?

Years:	0	1	2	3	4
	|	|	|	|	|
CFs:	$0	$75	$225	$0	$300

a.	$411.57
b.	$433.23
c.	$456.03
d.	$480.03
e.	$505.30
	4.	What is the present value of the following cash flow stream at a rate of 12.0%?

Years:	0	1	2	3	4
	|	|	|	|	|
CFs:	$0	$1,500	$3,000	$4,500	$6,000

a.	$9,699
b.	$10,210
c.	$10,747
d.	$11,284
e.	$11,849
	
5.	What is the present value of the following cash flow stream at a rate of 8.0%?

Years:	0	1	2	3
	|	|	|	|
CFs:	$750	$2,450	$3,175	$4,400

a.	$7,917
b.	$8,333
c.	$8,772
d.	$9,233
e.	$9,695




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