Practice Quiz 1 - Fall 2017 - ANSWER KEY Corrected.docx

Practice Quiz 1 - Fall 2017 - ANSWER KEY Corrected.docx -...

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Name _________________________________ UIN _____________________ Section (circle one): 11:00 am 12:30 pm FIN 301 O’Brien – Quiz One You have 25 minutes to complete this quiz. You are allowed to use a (non-graphing) calculator. A formula sheet is provided for you on the last page of the exam. Any evidence of cheating will result in a score of zero. 1. You are given the opportunity to make an investment in a unique financial instrument. If you invest, you would receive cash flows at the end of the next three years in the following manner (assume that the end of “Year 1” is one full year from today): Year 1: $9,000 Year 3: $10,000 Year 4: $12,000 You could personally invest this cash and receive for a 3% annual return. Write out the formula you would you use to calculate the total value of these cash flows as of the end of year 4. PV = (9,000)*(1.03) 3 + (10,000)*(1.03) 1 + (12,000) = $32,134. Writing out the formula before the equals sign above is enough for full credit! 2. You are looking to take an initial investment of $10,000 and double it. If you can receive a 12% annual return on your investment, how many years (rounded to the nearest whole number) would it take you to double this money?
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