# Time value of money

Not what you're looking for?

1)

Calculate the future value of $2000 in

a) 5 years at interest rate of 5% per year

b) 10 years at an interest rate of 5% per year

c) 5 years at an interest rate of 10% per year

d) why is the amount of interest earned in part (a) less than half the amount of interest earned in (b)

2)

You are thinking of retiring. Your retirement plan will either pay you $250000 immediately on retirement or $350000 five years after

date of retirement. Which alternative should you choose if interest rate is;

0% per year

8% per year

20% per year

3)

you have been offered a unique investment opportunity. If you invest $10,000 today you will receive $500 one year from now; $1500 two years from now and $10,000 ten years from now

what is the NPV of the opportunity if the interest rate is 6% per year? Should you take the opportunity?

what is the NPV of the opportunity if the interest rate is 2% per year? Should you take the opportunity?

4)

What is the present value of $1000 paid at the end of each of the next 100 years if interest rate is 7% per year?

5)

you have found 3 investment choices for a one year deposit

****10% APR compounded monthly

****10% APR compounded annually

****9% APR compounded daily

Compute the EAR for each investment with 365 days in the year

6)Key Bank is offering a 30 year mortgage with an EAR of 5 and 3/8%. If I borrow $ 150,000 what will be my monthly payment?

7)

if the rate of inflation is 5% what nominal interest rate is necessary for you to earn a 3% real interest rate on your investment

8) your best taxable investment has an EAR of 4%. Your best tax-free investment opportunity has an EAR of 3%.

If your tax rate is 30%, which opportunity provides the higher after-tax interest rate?

##### Purchase this Solution

##### Solution Summary

The solution explains some multiple choice questions relating to time value of money

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

##### Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

##### MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

##### Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

##### Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.