# Time Value of Money Solution set

Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.

a) What is the amount of the payments that Tom Brokaw must make at the end of each of 8 years to accumulate a fund of $70,000 by the end of the eight year, if the fund earns 8% interest, compounded annually? (Provide calculation as well)

b) Anderson Cooper is 40 years old today and he wishes to accumulate $500,000 by his sixty-fifth birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his fortieth through his sixty-fourth birthdays. What annual deposits must Anderson make if the fund will earn 12% interest compounded annually?(provide calculation as well)

c) Jane Pauley has $20,000 to invest today at 9% to pay a debt of $56,253. How many years will it take her to accumulate enough to liquidate the debt? (Provide calculation as well)

d)Maria Shriver has a $27,600 debt that she wishes to repay 4 years from today; she has $18,181 that she intends to invest for the 4 years. What rate of interest will she need to earn annually in order to accumulate enough to pay the debt? (Provide calculation as well)

Thanks

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#### Solution Preview

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Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.

a) What is the amount of the payments that Tom Brokaw must make at the end of each of 8 years to accumulate a fund of $70,000 by the end of the eight year, if the fund earns 8% interest, compounded annually? (provide calculation as well)

The value of ordinary annuity is to be calculated.

n= 8

r= 8.00%

FVIFA (8 periods, 8.% rate ) ...

#### Solution Summary

This solution set provides both plain text calculations and formatted calculations and tables in the attached Excel file relating to the time value of money questions.