Question 1
If you invest $5000 in a CD with an interest rate of 8% per
year, how much will you have at the end of 5 years? Round off your
final answer to two digits after the decimal point. State your
answer as "x.xx'"
Question 2
What is the present value of $100,000 paid at the end of ten
years, if your opportunity cost is 5 percent per year? Round off
your final answer to three digits after the decimal point. State
your answer as "x.xxx'
Question 3
If the annual interest rate is 4 percent, which one would you
prefer?
Receive $23,000 two years from now?
Receive $25,000 three years from now?
Receive $18,000 one year from now?
Question 4
If your goal is to maximize your investment value at the end of
five years, which option would you prefer?
Investing $9,000 today at an interest rate of 3 percent per
year
Investing $8,000 today at an interest rate of 5 percent per
year
Investing $9000 today at an interest rate of 2 percent per year
for two years and then at an interest rate of 4 percent per year
for the last three years