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5. Your friend is considering a project for their business that costs $100,000 upfront and will pay $25,000 per year for each of the next five years. Based on your NPV analysis, what would you recommend for your friend to do? a) Invest in the project. b) Do not invest in the project. c) Wait a year and then invest in the project. d) There is not enough information to say. 6. You need $1 million dollars saved for retirement in 20 years' time. The interest rate that you could get on your investment is 8% annually. How much do you have to save today to have $1 million dollars in the future? Assume you can't contribute any more cash flows after today. Round to the nearest thousand dollars. a) $215,000 b) $233,000 c) $833,000 d) $926,000 7. Valley Bank has approved a company loan of $6,500,000 at a quoted rate of 9.2% compounded semi-annually. If the company needs to make loan payments every month and the tenor of the loan is 10 years (i.e. it's a 10-year amortization period), how much do they need to pay every month (assuming payments are made at the end of each month)? a) $82,439. b) $81,754. c) $81,154. d) $80,368. 8. You have an investment of $100,000 for one year that makes an annual interest rate of 10%, compounded annually. Your bank offers you a promotion with continuous compounding. How much more are you making on your investment if you switch from annual compounding to continuous? Round to the nearest hundred dollars. a) $400 b) $500 c) $600 d) $700

5. Your friend is considering a project for their business that costs $100,000 upfront and will pay $25,000 per year for each of the next five years. Based on your NPV analysis, what would you recommend for your friend to do? a) Invest in the project. b) Do not invest in the project. c) Wait a year and then invest in the project. d) There is not enough information to say. 6. You need $1 million dollars saved for retirement in 20 years' time. The interest rate that you could get on your investment is 8% annually. How much do you have to save today to have $1 million dollars in the future? Assume you can't contribute any more cash flows after today. Round to the nearest thousand dollars. a) $215,000 b) $233,000 c) $833,000 d) $926,000 7. Valley Bank has approved a company loan of $6,500,000 at a quoted rate of 9.2% compounded semi-annually. If the company needs to make loan payments every month and the tenor of the loan is 10 years (i.e. it's a 10-year amortization period), how much do they need to pay every month (assuming payments are made at the end of each month)? a) $82,439. b) $81,754. c) $81,154. d) $80,368. 8. You have an investment of $100,000 for one year that makes an annual interest rate of 10%, compounded annually. Your bank offers you a promotion with continuous compounding. How much more are you making on your investment if you switch from annual compounding to continuous? Round to the nearest hundred dollars. a) $400 b) $500 c) $600 d) $700

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