Time Value of Money

If you have THB 10,000 today and the interest rate is 3%, in 10 years, you will have:

• 7,441

• 13,000

• 13,439

• 85,302

At an annual interest rate of 6%, the present value of THB 5,000 received in 5 years is closest to:

• 3,736

• 3,846

• 6,691

• 6,500

At an annual interest rate of 25%, the present value of GBP 500 received every year forever, but starting in 3 years (i.e. the first cash flow is at t=2) is closest to:

• 256

• 1024

• 1280

• 2000

You recently won a competition, and the organizer has the following menu of prizes for you to choose from. You can only choose one option. If the discount rate is 12%, which option would you choose?

• THB 100,000 today (t=0)

• THB 180,000 in 5 years (t=5)

• THB 11,400 forever starting from the end of this year (t=1)

• THB 18,000 every year for 10 years starting at the end of this year (t=1)

Suppose you have the following cash flow:

Year 0: -1.00

Year 1: +0.25

Year 2: +0.45

Year 3: +0.65

If the discount rate is 10%, then NPV of the cash flow is:

• -0.09

• 0.09

• 0.35

• 1.09

Suppose you have the following cash flow:

Year 0: -1.00

Year 1: +0.25

Year 2: +0.45

Year 3: +0.65

If the discount rate is 10%, what can you say about the IRR of the cash flow?

• IRR < 10%

• IRR = 8.8%

• IRR > 10%

• IRR = 35%

PTTEP is considering purchasing an oil well that will generate USD 100 million in cash flow next year (t=1). However, with falling oil price, you expect the cash flow to decline by 2% per year. If the discount rate is 8% and the asking price for the oil well is USD 1,000 million, what is the NPV of the oil well?

• USD -250 million

• USD 0 million

• USD 250 million

• USD 667 million