Essay by yoyo33High School, 12th gradeB, November 2014

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Tutorial 5 Time Value Of Money ( Questions )

1. Gerold invested $6,200 in an account that pays 5 percent simple interest. How much money will he have at the end of ten years?

2. What is the future value of $7,189 invested for 23 years at 9.25 percent compounded annually?

3. Travis invested $9,250 in an account that pays 6 percent simple interest. How much more could he have earned over a 7-year period if the interest had compounded annually?

4. Today, you earn a salary of $36,000. What will be your annual salary twelve years from now if you earn annual raises of 3.6 percent?

5. What is the present value of $150,000 to be received 8 years from today if the discount rate is 11 percent?

6. Forty years ago, your mother invested $5,000. Today, that investment is worth $430,065.11. What is the average annual rate of return she earned on this investment?

7. You just won the grand prize in a national writing contest! As your prize, you will receive $2,000 a month for ten years. If you can earn 7 percent on your money, what is this prize worth to you today?

8. Your employer contributes $75 a week to your retirement plan. Assume that you work for your employer for another 20 years and that the applicable discount rate is 7.5 percent. Given these assumptions, what is this employee benefit worth to you today?

9. The Design Team just decided to save $1,500 a month for the next 5 years as a safety net for recessionary periods. The money will be set aside in a separate savings account which pays 4.5 percent interest compounded monthly. The first deposit will be made today. What would today's deposit amount have to be if the firm opted...