1.
**Present value:**Tommie Harris is considering an
investment that pays 6.5 percent annually. How much must he invest
today such that he will have $25,000 in seven years? (Round to the
nearest dollar.)

2.
**PV of multiple cash flows:**Jack Stuart has loaned
money to his brother at an interest rate of 5.75 percent. He
expects to receive $625, $650, $700, and $800 at the end of the
next four years as complete repayment of the loan with interest.
How much did he loan out to his brother? (Round to the nearest
dollar.)

3.
**PV of multiple cash flows:**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.)

4.
**PV of multiple cash flows:**Pam Gregg is expecting
cash flows of $50,000, $75,000, $125,000, and $250,000 from an
inheritance over the next four years. If she can earn 11 percent on
any investment that she makes, what is the present value of her
inheritance? (Round to the nearest dollar.)

5.
**Present value of an annuity:**Transit Insurance
Company has made an investment in another company that will
guarantee it a cash flow of $37,250 each year for the next five
years. If the company uses a discount rate of 15 percent on its
investments, what is the present value of this investment? (Round
to the nearest dollar.)

6.
**Future value of an annuity:**Carlos Menendez is
planning to invest $3,500 every year for the next six years in an
investment paying 12 percent annually. What will be the amount he
will have at the end of the six years? (Round to the nearest
dollar.)

7.
**Bond price:**Briar Corp is issuing a 10-year bond
with a coupon rate of 7 percent. The interest rate for similar
bonds is currently 9 percent. Assuming annual payments, what is the
present value of the bond? (Round to the nearest dollar.)

8.
**PV of dividends:**Cortez, Inc., is expecting to pay
out a dividend of $2.50 next year. After that it expects its
dividend to grow at 7 percent for the next four years. What is the
present value of dividends over the next five-year period if the
required rate of return is 10 percent?

9.
**PV of dividends:**Givens, Inc., is a fast growing
technology company that paid a $1.25 dividend last week. The
company's expected growth rates over the next four years are as
follows: 25 percent, 30 percent, 35 percent, and 30 percent. The
company then expects to settle down to a constant-growth rate of 8
percent annually. If the required rate of return is 12 percent,
what is the present value of the dividends over the fast growth
phase?

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