# Principles of Finance

There are two options to choose from option 1 or option 2. Please be detailed and demonstrate work. Thank you Option #1 Question 1: Future and Present Values If you invest \$100 at an interest rate of 15%, how much will you have at the end of eight years? The cost of an automobile is \$10,000. If the interest rate is 5%, how much would you have to set aside now to provide this sum in five years? If the cost of capital is 9%, what is the PV of \$374 paid in year 9? If the PV of \$10 a year for three years is \$24.65, what is the three-year annuity factor? Question 2: Compounding You are quoted an interest rate of 6% on an investment of \$10 million. What is the value of your investment after four years if interest is compounded: Annually? Monthly? Continuously?
Which would you prefer? (Work out the value of each investment after 1, 5, and 20 years)An investment paying interest of 12% compounded annually. An investment paying interest of 11.7% compounded semiannually. An investment paying 11.5% compounded continuously.