Mohammad El Turk Managerial Finance

ID: 4020200033
Assignment Chapter 5

1) The future value of $200 received today and deposited at 8 percent for three
years is:

a) $248.
b) $252.
c) $158.
d) $200.

2) The present value of $100 to be received 10 years from today, assuming an

opportunity cost of 9 percent, is:

a) $236.
b) $699.
c) $ 42.
d) $ 75.

3) The present value of a $25,000 perpetuity at a 14 percent discount rate is:

a) $178,571.
b) $285,000.
c) $350,000.
d) $219,298.

4) The present value of a $20,000 perpetuity at a 7 percent discount rate is:

a) $186,915.
b) $285,714.
c) $140,000.
d) $325,000.
Mohammad El Turk Managerial Finance
ID: 4020200033
5) 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?

a) $19,292
b) $14,938
c) $40,000
d) $144,104

6) The future value of a $2,000 annuity due deposited at 8 percent compounded

annually for each of the next 10 years is:

a) $28,974.
b) $31,292.
c) $14,494.
d) $13,420.

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

a) $288.
b) $1,896.
c) $1,750.
d) $1,558.

8) You have been offered a project paying $300 at the beginning of each year for
the next 20 years. What is the maximum amount of money you will invest in
this project if you expect 9 percent rate of return to your investment?

a) $ 2,738.70
b) $ 2,985.18
c) $15,347.70
d) $ 6,000.00