1. At an interest rate of 12%, the six-year discount factor is .507. How many dollars is $.507 worth in six years if invested at 12%?
2. If the PV of $139 is $125, what is the discount factor?
3. If the cost of capital is 9%, what is the PV of $374 paid in year 9?
4. A project produces a cash flow of $432 in year 1, $137 in year 2, and $797 in year 3. if the cost of capital is 15%, what is the project's PV?
5. If you invest $100 at an interest rate of 15%, how much will you have at the end of eight years?
The problem deals with discounting under finance.