Unformatted text preview: payment of 8 percent, how much must the firm invest today to be able to make the $1.5 million payment? 3. You have $100,000 to invest for six years. You can invest this at a rate of 7.67% compounded annually, at a rate of 7.52% compounded quarterly, or at a rate of 7.35% compounded monthly. Which of the three alternatives would give you the highest amount in six years? 4. If you can afford a $400 monthly car payment, how much car can you afford if interest rates (APR) are 7% on 36month loans? 5. A definedbenefit retirement plan offers to pay $20,000 per year for 40 years and increase the annual payment by 3percent each year. What is the present value at retirement if the discount rate is 10percent?...
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 Spring '08
 Finance, Corporate Finance, Net Present Value, Personal Finance, Professor H. Wang

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