**Find the future value one year from now of a $7,000**

**investment at a 3 percent annual compound interest rate.**

Problem 1 Your finance text book sold 54,500 copies in its first

year. The publishing company expects the sales to grow at a rate of

17.0 percent for the next three years, and by 8.0 percent in the

fourth year. Calculate the total number of copies that the

publisher expects to sell in year 3 and 4. (If you solve this

problem with algebra round intermediate calculations to 6 decimal

places, in all cases round your final answers to the nearest whole

number.) ___________

Problem 2 Find the present value of $4,800 under each of the

following rates and periods. (If you solve this problem with

algebra round intermediate calculations to 6 decimal places, in all

cases round your final answer to the nearest penny.) a. 8.9 percent

compounded monthly for five years. Present value $ ________

b. 6.6 percent compounded quarterly for eight years. Present

value $ ________

c. 4.3 percent compounded daily for four years. Present value $

____________

d. 5.7 percent compounded continuously for three years. Present

value $ _________

Problem 3 Trigen Corp. management will invest cash flows of

$612,209, $428,657, $934,837, $818,400, $1,239,644, and $1,617,848

in research and development over the next six years. If the

appropriate interest rate is 9.85 percent, what is the future value

of these investment cash flows six years from today? (Round answer

to 2 decimal places, e.g. 15.25.) Future value $ _______

Problem 4 You wrote a piece of software that does a better job

of allowing computers to network than any other program designed

for this purpose. A large networking company wants to incorporate

your software into their systems and is offering to pay you

$489,000 today, plus $489,000 at the end of each of the following

six years for permission to do this. If the appropriate interest

rate is 8 percent, what is the present value of the cash flow

stream that the company is offering you? (Round answer to the

nearest whole dollar, e.g. 5,275.) Present value $ ________

Problem 5 Barbara is considering investing in a stock and is

aware that the return on that investment is particularly sensitive

to how the economy is performing. Her analysis suggests that four

states of the economy can affect the return on the investment.

Using the table of returns and probabilities below, find

Probability Return ________________________________________ Boom

0.1 25.00% Good 0.3 15.00% Level 0.4 10.00% Slump 0.2 -5.00%

________________________________________

What is the expected return on Barbara’s investment? (Round

answer to 3 decimal places, e.g. 0.076.) Expected

return__________

What is the standard deviation of the return on Barbara’s

investment? (Round intermediate calculations and answer to 5

decimal places, e.g. 0.07680.) Standard deviation ____________

Problem 6 Trevor Price bought 10-year bonds issued by Harvest

Foods five years ago for $917.44. The bonds make semiannual coupon

payments at a rate of 8.4 percent. If the current price of the

bonds is $1,012.87, what is the yield that Trevor would earn by

selling the bonds today? (Round intermediate calculations to 4

decimal places, e.g. 1.2514 and final answer to 2 decimal places,

e.g. 15.25%.) Effective annual yield________%

Problem 7 The First Bank of Ellicott City has issued perpetual

preferred stock with a $100 par value. The bank pays a quarterly

dividend of $1.65 on this stock. What is the current price of this

preferred stock given a required rate of return of 12.0 percent?

(Round answer to 2 decimal places, e.g. 15.25.) Current price $ Find the future value one year from now of a $7,000

investment at a 3 percent annual compound interest rate.

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