# Components in Calculating the Time Value of Money

All answers should be in a single Excel file.

Show the step by step calculations how it was done and explained thoroughly by using excel:

1 If you deposit $15,000 today and earn 8% annual interest, how much will you have in 9 years?

Answer: $29,985.07

2 Tiffany will receive a graduation gift of $10,000 from her parents in 3 years. If the discount rate

is 7%, what is this gift worth today?

Answer: $8,162.98

3 What is the present value of a 20-year ordinary annuity of $30,000 using a 6% discount rate?

Answer: $344,097.64

4 You deposit $5,000 in an account that pays 8% interest per annum. How long will it take to double your money?

Answer: 9 years

5 The Johnsons have $60,000 to use as a down-payment on a house, and they want to borrow $240,000

from the bank. The current mortgage interest rate is 5%. If they make equal monthly payments for 30 years,

how much will the monthly payment be?

Answer: $1,288.37

6 Tim paid $250 per month into his 401K retirement plan. After 30 years, he had accumulated $500,000. What

average annual rate of interest had he earned over the 30 years?

Answer: 9.42%

7 Charlotte's firm had sales of $525,000 in the year 2001. By 2012, sales had increased to $1,200,000. What was

the average annual rate of increase?

Answer: 7.80%

https://brainmass.com/business/the-time-value-of-money/components-in-calculating-the-time-value-of-money-581493

#### Solution Summary

The solution explains how to use Excel to calculate each component involved in the time value of money, for example, discount rate, period, present value, future value, etc.

7 questions; attached as Excel.