1. Trayne Rice has $3,000 to invest for three years. He wants to receive $5,000 at the end of the three years. What invest rate would his investment have to earn to achieve his goal? (Round to the nearest percent.)
| a. | 19% |
| b. | 21% |
| c. | 16% |
| d. | 13% |
2. Your mother is trying to choose one of the following bank CDs to deposit $10,000. Which one will have the highest future value if she plans to invest for three years?
| a. | 3.75% compounded annually. |
| b. | 3.5% compounded daily |
| c. | 3.4% compounded quarterly |
| d. | 3.25% compounded monthly |
3. Hassan Ali has made an investment that will pay him $11,455, $16,376, and $19,812 at the end of the next three years. His investment was to fetch him a return of 14 percent. What is the present value of these cash flows? (Round to the nearest dollar.)
| a. | $36,022 |
| b. | $41,675 |
| c. | $39,208 |
| d. | $33,124 |
4. Genaro needs to capture a return of 40 percent for his one-year investment in a property. He believes that he can sell the property at the end of the year for $150,000 and that the property will provide him with rental income of $25,000. What is the maximum amount that Genaro should be willing to pay for the property?
| a. | $112,500 |
| b. | $150,000 |
| c. | $125,000 |
| d. | $137,500 |
