Explore BrainMass

Finance Questions: Time Value of Money

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

Application # 28
You're trying to save up for a long and expensive vacation. You want to take a trip to Europe when you graduate in three years. Considering how much more expensive is the Euro (?) to the U.S. Dollar ($), and if you can earn 15% on your investments, how much would you have to deposit in order to have $30,000 when you graduate?

Application # 29
Would you rather have $500 now or $1,000 ten years from now? You can earn 6% on any investments. Please justify your answer

Application # 30
You can buy a mortgage from a mortgage broker. Mortgage payments are $35,000 per year and there are 15 years to maturity. The broker is asking $350,000 for the note. You already hold similar mortgages and they yield 12%. Should you buy this note?

© BrainMass Inc. brainmass.com September 26, 2018, 1:28 am ad1c9bdddf - https://brainmass.com/business/the-time-value-of-money/finance-question-time-value-money-377028


Solution Preview

Application # 28

We are given the future value and we have to find the present value which would grow to future value in 3 years. Use the compound interest formula
PV = FV/(1+rate)^n
FV = $30,000
Rate = 15%
n = 3 years
Amount to deposit now PV = ...

Solution Summary

This solution provides a detailed, step by step calculation of the given problem.