10 Last Christmas Danny received an annual bonus of 1500 These annual bonuses

10 last christmas danny received an annual bonus of

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received at the end of year 2, and $5,000 received at the end of year 3, all sums deposited at 5 percent.10) Last Christmas, Danny received an annual bonus of $1,500. These annual bonuses are expected to grow by 5 percent for the next 5 years. How much will Danny have at the end of the fifth year if he invests his Christmas bonuses (including the most recent bonus) in a project paying 8 percent per year? 11) Calculate the present value of the following stream of cash flows, assuming that the firm's opportunity cost is 15 percent.12) Compute the interest rate for a $1,000 face value a bond that sells for $280 and matures in 20 years. The bond
has no coupon payments, only the face value payment. 13) Calculate which has a higher present value: an annual payment of $100 received over 3 years or an annual payment of $50 received over 7 years. In both cases the interest rate is 7% (or 0.07). 14) Which investment plan will provide the highest future value: $500 invested at 5 percent annually for four years and then that balance invested at 7 percent annually for an additional three years, or $500 invested at 6 percent annually for seven years? 15) An investment grows from $2,000 to $2,750 over the period of 10 years. What average annual growth rate will produce this result? 16) Calculate the internal rate of return for a machine that costs $500,000 and provides annual revenue of $115,000 per year for 5 years. You can assume all revenue is received once a year at the end of the year. 17) You win your state lottery. The lottery officials offer you the following options: you can accept annual payments of $50,000 for 20 years or receive an upfront payment of $700,000. Ignoring issues like mortality tables, taxes, etc.; and assuming the first payment is made immediately, what market interest rate would make

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