4. Bill wants to give Maria a $500,000 gift in seven years. If money is worth 6% compounded
semiannually, what is Maria's gift worth today?
A. $ 66,110.
B. $ 81,310.
5. Monica wants to sell her share of an investment to Barney for $50,000 in three years. If money is worth
6% compounded semiannually, what would Monica accept today?
A. $ 8,375.
6. At the end of the next four years, a new machine is expected to generate net cash flows of $8,000,
$12,000, $10,000, and $15,000, respectively. What are the cash flows worth today if a 3% interest rate
properly reflects the time value of money in this situation?
7. At the end of each quarter, Patti deposits $500 into an account that pays 12% interest compounded
quarterly. How much will Patti have in the account in three years?
8. Sondra deposits $2,000 in an IRA account on April 15, 2009. Assume the account will earn 3%
annually. If she repeats this for the next nine years, how much will she have on deposit on April 14, 2019?
9. Shelley wants to cash in her winning lottery ticket. She can either receive ten, $100,000 semiannual
payments starting today, or she can receive a lump-sum payment now based on a 6% annual interest rate.
What is the equivalent lump-sum payment?