1. Business
2. Finance
3. The Time Value of Money
4. 428770

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

4-1 If you deposit $10,000 in a bank that pays 10% interest annually, how much will be in your account after 5 years.

4-2 What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

4-3 Your parents will retire in 18 years. They currently have $250,000 and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?

4-4 If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money?

4-5 You have $42,180.53 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $250,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal?

4-6 What is the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value be?

4-7 An investment will pay $100 at the end of each of next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If the other investments of equal risk earn 8% annually, what is this investment's present value? Its future value?

Attachments

• Problems.pdf