Q6. What is the present value of a 10-year, $100 annual annuity due if interest rates are 0%?

A)   $900.

B)   $1,000.

C)   No solution.

Q7. Justin Banks just won the lottery and is trying to decide between the annual cash flow payment option or the lump sum option. He can earn 8% at the bank and the annual cash flow option is $100,000/year, beginning today for 15 years. What is the annual cash flow option worth to Banks today?

A)    $855,947.87.

B)    $924,423.70.

C)    $1,080,000.00.

Q8. If an investor puts $5,724 per year, starting at the end of the first year, in an account earning 8% and ends up accumulating $500,000, how many years did it take the investor?

A)   87 years.

B)   26 years.

C)   27 years.

Q9. If $2,000 a year is invested at the end of each of the next 45 years in a retirement account yielding 8.5%, how much will an investor have at retirement 45 years from today?

A)   $901,060.

B)   $100,135.

C)   $90,106.

Q10. An investor wants to receive $1,000 at the beginning of each of the next ten years with the first payment starting today. If the investor can earn 10 percent interest, what must the investor put into the account today in order to receive this $1,000 cash flow stream?

A)   $6,145.

B)   $7,145.

C)   $6,759.

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