Free Financial Mathematics Cash Flows Questions and Answers

Question 1

You invest $1,000 today at an annual interest rate of 6%. What will it be worth in 5 years?

Accepted Answer

$1,312.74

Answer

$1,338.23

Answer

$1,300.00

Answer

$1,340.00

Question 2

What is the present value of receiving $500 annually for 10 years if the discount rate is 8%?

Accepted Answer

$3,577.10

Answer

$3,355.00

Answer

$3,690.00

Answer

$3,465.10

Question 3

If you receive $200 annually forever, and the discount rate is 5%, what is the present value?

Accepted Answer

$4,000

Answer

$5,000

Answer

$4,500

Answer

$4,200

Question 4

Consider the following cash flows:
Year 0: -$5,000
Year 1: $2,000
Year 2: $2,500
Year 3: $2,800
If the discount rate is 10%, what is the NPV?

Accepted Answer

$1,075.62

Answer

$1,100.00

Answer

$1,200.54

Answer

$1,050.00

Question 5

For the following cash flows, calculate the approximate IRR:
Year 0: -$10,000
Year 1: $4,000
Year 2: $4,000
Year 3: $5,000

Accepted Answer

10%

Answer

8%

Answer

9%

Answer

11%