1. Which is better, $1 NOW or $1 a year from now? a. Now b. 1 year later C. Same value

2. The following are exercises in present values: a. $100 at the end of three years is worth how much today, assuming a discount rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent? b. What is the aggregate present value of $500 received at the end of each of the next three years, assuming a discount rate of (i) 4 percent? (ii) 25 percent? C. $100 is received at the end of one year, $500 at the end of two years, and $1,000 at the end of three years. What is the aggregate present value of these receipts, assuming a discount rate of (i) 4 percent? (ii) 25 percent? d. $1,000 is to be received at the end of one year, $500 at the end of two years, and $100 at the end of three years. What is the aggregate present value of these receipts assum- ing a discount rate of (i) 4 percent? (ii) 25 percent? e. Compare your solutions in Part (c) with those in Part (d) and explain the reason for the differences.

The present value of a single sum is equal to the amount that, if invested today at the specified discount rate, would return the value of the single sum every year for a specified number of years. Select one: O True O False

Approximately, what is the value of (F) if P-15300, n=7 years, and i= 6% per year? Select one: O a. 23006 O b. 30829 O c. 27608 O d. 19095

iii. For each of the following, compute the futurevalue: Present Value $ 2,597 7,834 81,286 213,612 Years 11 7 14 16 Interest Rate 13% 9 12 6 Future Value

4

F2

Future value

4. If you receive $116 each month for 28 years and the discount rate is 0.08, what is the present value? (show the process and can use financial calculator)

15. Consider the following possible returns over the next year on an asset.Return Probability–£40 0.5£40 0.5What is the standard deviation of return of the asset.