Practice Questions

A collection of practice questions from past exams about all topics and types.

Intro to Finance, Time Value of Money, Missing payments Ismail Francillon Intro to Finance, Time Value of Money, Missing payments Ismail Francillon

Solving for missing cash flows

The present value (t=0) of the following cash flow stream is $3,569.17 when discounted at 7.25% compounded quarterly: 0.5x at the end of year 1, $412 at the end of year 2, 2.4x at the end of year 3, and $175 at the end of year 4. Assume this pattern of payments will continue in perpetuity (every 4 years). What is the value of the missing cash flows (x)?

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Intro to Finance, Time Value of Money, Missing payments Ismail Francillon Intro to Finance, Time Value of Money, Missing payments Ismail Francillon

Solving for missing cash flows

Your friends, Lee and Kuan, are struggling to solve for the missing cash flows of the following cash flow stream:

In fact, they're convinced that "x" must be $115.16. Note that the present value of the above cash stream with annual payments is $5,095.00, and the discount rate is 8.9411% compounded 365 time(s) per year.

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Intro to Finance, Time Value of Money, Growing Annuity Ismail Francillon Intro to Finance, Time Value of Money, Growing Annuity Ismail Francillon

Solving for the future value of a growing annuity

Your job pays you at the end of the year and today, December 31, you just received your salary of $125,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 20% of your annual salary in an account that will earn 4.5% per year.

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