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    Time Value of Money

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    1. A bond is selling for 95% of par and has an annual coupon rate of 6% and will mature in five years. There are semi-annual coupon payments. Calculate the yield-to-maturity.

    2. How much money will William have in five years if he places $2500 into a CD earning an annual interest rate of 7.5% compounded annually?

    3. An ordinary annuity has equal periodic cash flows at the_____ of the period and an annuity due has equal periodic cash flows at the_________ of the period.

    4. Your firm is planning to invest $350,000 per year in equal annual end-of-the-year cash flows to fund a capital improvement fund. If the investments are expected to earn 10% per year, how much will the account be worth in 7 years?

    5. Your parents put equal annual beginning-of-the-year deposits of $1,200 into an account earning 8% per year from the day you were born until your 18th birthday (a total of 19 deposits). How much money is in that account today?

    6. Tucker Binson put $5,000 into a three-year CD paying 7% interest compounded quarterly. How much interest will he have earned when the CD matures?

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    Solution Summary

    The solution has various time value of money problems