Quiz 1

1. Sara wants to have $600,000 in her savings account when she retires. How much must she put
in the account now, if the account pays a fixed interest rate of 8%, to ensure that she has
$600,000 in 20 years?
2. Ali wans to invest 14000 into bank account that is promising 11.2% compounded monthly what
will be in the account after 4 years.
3. If your parents saved 100000 for your 20 th birthday from CD which they started ten years ago
what is the interest rate if initial deposit was 60000.
Quiz 2

1. Joe just inherited the family business, and having no desire to run the family business, he
has decided to sell it to an entrepreneur. In exchange for the family business, Joe has been
offered an immediate payment of $100,000. Joe will also receive payments of $50,000 in
one year, $50,000 in two years, and $75,000 in three years. The current market rate of
interest for Joe is 6%.

2. An annuity pays $10 per year for 98 years. What is the present value (PV) of this annuity
given that the discount rate is 7%?

3. Ally wishes to leave a provision in her will that $12000 will be paid annually in perpetuity to a
local charity. How much must she provide in her will for this perpetuity if the interest rate is 4%?
Quiz 2

1. A business promises to pay the investor of $6000 today for a payment of $1500 in one
year's time, $3000 in two years' time, and $3000 in three years' time. What is the present
value of this business opportunity if the interest rate is 6% per year?

2. An annuity is set up that will pay $1500 per year for ten years. What is the present value (PV) of
this annuity given that the discount rate is 9%?

3. Ally wishes to leave a provision in her will that $7000 will be paid annually in perpetuity to a
local charity. How much must she provide in her will for this perpetuity if the interest rate is 6%?