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Basic TMV concepts

1. Future Value. What is the future value of
a. $800 invested for 14 years at 11 percent compounded annually?
b. $210 invested for 8 years at 9 percent compounded annually?
c. $650 invested for 12 years at 8 percent compounded annually?

2. Present Value. What is the present value of
a. $803 to be received 18 years from now at a 10 percent discount rate?
b. $406 to be received 7 years from now at a 5 percent discount rate?
c. $400 to be received 10 years from now at a 9 percent discount rate?

3. Future Value of an Annuity. What is the future value of
a. $557 a year for 12 years at 5 percent compounded annually?
b. $748 a year for 9 years at 12 percent compounded annually?
c. $442 a year for 7 years at 11 percent compounded annually?

4. Present Value of an Annuity. What is the present value of
a. $1,163 a year for 12 years at an 7 percent discount rate?
b. $329 a year for 6years at a 12 percent discount rate?
c. $365 a year for 20 years at a 14 percent discount rate?

5. How many years will it take to grow
a. $765 to a value of 2,028.19 at a compound rate of 14 percent?
b. $321 to a value of 450.22 at a compound rate of 12 percent?
c. $881 to a value of 1,305.78 at a compound rate of 7 percent?

6. Interest Rate. At what interest rate will it take to grow
a. $800to a value of 1,017.13 over 6 years?
b. $600 to a value of 1,082.08 over 5 years?
c. $401 to a value of 1,311.16 over 6 years?

7. Car Loans (Hint: P/Y=12). How much is a car loan with a payment of
a. $453 per month for 3 years at 6% interest per year?
b. $466 per month for 5 years at 15% interest per year?
c. $301 per month for 6 years at 7% interest per year?

8. Mortgages (Hint: P/Y=12).
What was the initial mortgage on the house?
a. $4,369.66 per month for 30 years at 8 percent interest?
b. $1,626.83 per month for 15 years at 4 percent interest?
c. $3,724.21 per month for 30 years at 18 percent interest?

9. Mortgages (Hint: P/Y=12). What is the payoff on a 30 year, 6% mortgage of
a. $255,413 with a payment of 1,321.33 with 8 years remaining?
b. $530,493 with a payment of 3,180.57 with 12 years remaining?
c. $297,266 with a payment of 1,782.26 with 11 years remaining?

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Solution Summary

Solutions to given problems depict the steps to calculate present and future values of given cash flows, time period, rate of interest and periodic payments. Calculations are carried out with the help of suitable built-in functions in MS Excel.

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