# 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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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

Answer: $69,143.01

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

Answer: $88,998.11

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

Amount ...

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