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# Time Value of Money

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Calculate the future value of the following:

a. \$49,298 if invested for five years at a 7% interest rate

b. \$79,119 if invested for three years at a 4% interest rate

c. \$69,124 if invested for seven years at an 2% interest rate

d. \$39,929 if invested for ten years with a 0.9% interest rate

3) Calculate the present value of the following:

a. \$105,126 to be received three years from now with a 4% Interest rate

b. \$228,231 to be received five years from now with a 5% interest rate

c. \$192,000 to received two years from now with a 12% interest rate

d. \$998,111 to be received eight years from now with a 1% interest rate.

4) Suppose you are to receive a stream of annual payments (also called an "annuity") of \$72,394 every year for three years starting this year. The interest rate is 4%. What is the present value of these three payments?

5) Suppose you are to receive a payment of \$189,299 every year for three years. You are depositing these payments in a bank account that pays 2% interest. Given these three payments and this interest rate, how much will be in your bank account in three years?

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Answers questions on Time Value of Money.

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2) Calculate the future value of the following:

Future value = Amount invested x FVIF
FVIF= Future Value of \$ 1 at the end of n periods
It can be read from tables or calculated using the following equation
FVIF( n, r%)= =(1+r%)^n

a. \$49,298 if invested for five years at a 7% interest rate

n= 5 years
r= 7.00%
FVIF (5 periods, 7.% rate ) = 1.402552

Amount invested= \$49,298.00
Therefore, future value= \$69,143.01 = \$49,298. x 1.402552

b. \$79,119 if invested for three years at a 4% interest rate

n= 3 years
r= 4.00%
FVIF (3 periods, 4.% rate ) = 1.124864

Amount invested= \$79,119.00
Therefore, future value= \$88,998.11 = \$79,119. x 1.124864

c. \$69,124 if invested for seven years at an 2% interest rate

n= 7 years
r= 2.00%
FVIF (7 periods, 2.% rate ) = 1.148686

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