4:04 **EditAdditional Exercise Questions on Time Value of MoneyMGTC03, Prof. Jason Z. Wei1. Find the values for the following:a. An initial $500 compounded for 1 year at 6 percent.b. An initial $500 compounded for 2 years at 6% percent.c. The present value of $500 due in 1 year at a discount rate of 6 percent.d. The present value of $500 due in 2 years at a discount rate of 6 percent.3. Which grows to a larger future value, $1000 invested for 2 years at:a. 10 percent each yearb. 5 percent the first year and 15 percent the second year orc. 15 percent the first year and 5 percent the second year?Explain your results.2. What is the monthly payment on a 5 year car loan for $14,000 at an annual interest rate of12%?4. Which grows to a larger future value:a. $4000 invested for 10 years at 5% orb. $2000 invested for 10 years at 10%.5. Which is worth more at 10 percent, compounded annually:$1000 in hand today or $2,000 due in 5 years?86. A paper company invests $4m to clear a tract of land and plant some young pine trees. Thetrees will mature in 10 years, at which time the forest will have a market value of $8m. What isthe expected rate of return for the paper company's investment?24x7. A 1987 advertisement in the New Yorker solicited offers on a 1967 Mercury Cougar XR7(Motor Trend's 1967 car of the year) that had been stored undriven in a climate controlledenvironment for 20 years. If the original owner paid $4000 for this car in 1967, what price wouldhe have to receive in 1987 to obtain a 10 percent annual return on his investment?8. Vincent Van Gogh sold only one painting during his lifetime, for about $30. A sunflower stilllife he painted in 1888 sold for $39.85 million in 1988,, more than three times the highest pricepaid previously for any work of art. If this painting had been purchased for $30 in 1888 and soldin 1988 for $39.85 million, what would have been the annual rate of return?Mobile View9. In 1940, your grandmother put $1000 into a special trust to be paid to a future grandchild(you) 60 years later, in the year 2000. How much will this trust be worth in the year 2000 if it hasbeen earning 8%? How much if it earns 12%.10. A lottery jackpot of one million is paid out $25,000 a year for 40 years. At a 10 percentDODOToolsShareOWPDF to DOC Edit on PC

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