# CORPORATE FINANCE –I

HOME ASSIGNMENT NO.1
Name:
Roll No:
Section:
1.

The future value of \$100 received today and deposited at 6 percent for four years is
126.25

2.

The present value of \$100 to be received 10 years from today, assuming an opportunity
cost of 9 percent, is 42.24

3.

The present value of a \$20,000 perpetuity at a 7 percent discount rate is 285714.28

4.

Bill plans to fund his individual retirement account (IRA) with the maximum contribution
of \$2,000 at the end of each year for the next 20 years. If Bill can earn 12 percent on his
contributions, how much will he have at the end of the twentieth year?
144,104.88

5.

The future value of a \$2,000 annuity due deposited at 8 percent compounded annually for
each of the next 10 years is
31290.97

6.

The future value of a \$10,000 annuity due deposited at 12 percent compounded annually
for each of the next 5 years is
71151.89

7.

The future value of an ordinary annuity of \$1,000 each year for 10 years, deposited at 3
percent, is 11463.88

8.

A college received a contribution to its endowment fund of \$2 million. They can never
touch the principal, but they can use the earnings. At an assumed interest rate of 9.5
percent, how much can the college earn to help its operations each year? 190,000

9.

The present value of an ordinary annuity of \$350 each year for five years, assuming an
opportunity cost of 4 percent, is 1558.14

10.

A generous benefactor to the local ballet plans to make a one-time endowment which
would provide the ballet with \$150,000 per year into perpetuity. The rate of interest is
expected to be 5 percent for all future time periods. How large must the endowment be?
3,000,000