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).