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    Time value of money computations

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    1) If you invest today, how much will you have :
    a. In 2 years at 9%?
    b. In 7 years at 12%?
    c. In 25 years at 14%?
    c. In 25 years at 14% (compound semiannually)?

    2) How much would you have to invest today to receive:
    a. $15,000 in 8 years at 10%?
    b. $20,000 in 12 years at 13%?
    c. $6,000 each years for 10 years at 9%?
    d. $50,000 each year for 50 years at 7%?

    3) If you invest $2,000 a year in a retirement account, how much will you have:
    a. In 5 years at 6%?
    b. In 20 years at 10%?
    c. In 40 years at 12%?

    4) Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year; $2.20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the edn of the third year the will be able to sell the stock for $33.
    What is the present value of all future benefits if a discount rate of 11 percent is applied? (Round all values to two places to the right of the decimal point.)

    **Please show all the work, I tried to do it but I am not sure if what I did is right.

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    Solution Preview

    1)Say you invest $9,000 today, how much will you have:

    P=present value, F= Future value i= rate of interest n=duration

    a. In 2 years at 9 percent? = 10692.90

    b. In 7 years at 12 percent? = 19896.13

    c. In 25 years at 14 percent? = 238157.24

    d. In 25 years at 14 percent (compounded semiannually)? = 265113.23

    Here i will be divided by half and duration will be multiplied by 2 as
    there is compounding semiannually

    2)How much would ...

    Solution Summary

    Response provide the steps and illustrations for the computations of time value of money questions such as finding out the present value , future value etc.