In four years Allan Chu plans to enroll in the masters program at York University. He estimates that tuition will be $40,000 and living expenses will be the same amount. His best investment opportunity is paying 6% compounded semi-annually.
How much must Allan invest now to have sufficient funds to cover his education?
a. $36,590.30
b. $37,770.22
c. $63,152.80
d. $66,128.44
e. None of the above
Suppose you receive $3,000 a year in years 1 through 4, $4,000 a year in years 5 through 9, and $2,000 in year 10, with all the money to be received at the end of the year. If your discount rate is 12%, what is the present value of these cash flows?
Kim wishes to have $5,000 for a vacation she wishes to take in 3 years. She can invest her money at 6% compounded annually.
How much does she need to invest today to have enough for her vacation in 3 years?
Given a cash flow of $300 occurring in year four, and an annual interest rate is 12%.
a. Calculate the present value of the cash flow if interest is calculated once a year.
b. Calculate the present value of the cash flow if interest is calculated twice a year.
c. Calculate the present value factor in part (b).
