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James Weinstock #67573931
Mgmt 109
October 9, 2011
Homework 1
5.3
calculating present values
pv=FV/(1+R)^T
Present value
Years
Interest rate
Future values
10,295.7
6
7%
15,451$
219,14.9
7
13
51,557
425,34.7
23
14
866,073
116,631
18
9
550164
5.7 At 7 % interest, how long does it take to double your money? Quadruple?
a.
around 10 years
b.
5.11 You have just received notification that you have won the 1 million first prize in the
centennial lottery. However, the prize will be awarded on your 100
th
birthday, 80 years
from now. What is the present value of your windfall if the appropriate discount rate is 10
percent?
PV=FV/(1+r)^T
PV=1,000,000/(1.10)^80
PV= 488.186$
5.14 In 2008, a gold Morgan dollar minted in 1895 sold for 43,125$. For this to have
been true, what rate of return did this coin return for the lucky numismatist?
FV=PV(1+r)^T
43,125=(1+r)^113
43125^(1/113)1 = R
=9.9 %
6.1 seaborn co has identified an investment project with the following cash flows. If the
discount rate is 10 %, what is the present value of these cash flows? What is the present
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This note was uploaded on 02/13/2012 for the course MGMT 109 taught by Professor Zheng during the Spring '11 term at UC Irvine.
 Spring '11
 Zheng

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