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Assigment 4

# Assigment 4 - Finance 300 Homework 4 Time Value of Money...

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Finance 300 Homework # 4 – Time Value of Money Name__________________________________ 1. Future Value of a Single Cash Flow or Lump Sum K-Fed needs your financial advice. He just got a \$100,000 divorce settlement and would like to invest it. You tell him that he should put his money into a Certificate of Deposit (CD) that pays 10% interest per year. Thus, How much should K-Fed obtain at the end of year 5? 2. Present Value of a Single Cash Flow or Lump Sum Beavis is your best friend. He was recently offered an investment that would pay him \$2,000 at the end of year 4. The interest rate quoted was 9% per year. What should be the most Beavis should pay for this investment, in other words, what is the present value of this investment? After you figured out the PV of this investment, Beavis tells you that the price of this investment is \$3,500. Do you recommend that he buys this investment? Explain (Note : you don’t need calculations here)

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3. Finding Interest Napoleon has been planning a hunting trip to Africa for years. Five years from today, he would like to make a trip to Africa and hunt a rhino. Napoleon knows that the price tag
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