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# Time Value of Money in Investments

Problem #1
Smolinski company is considering an investment which will return a lump sum of \$5000,000 five years from now. What amount should simolinski company pay for this investment to earn a 15% return.

Problem #2
Kilarny company is considering investing in an annuity cintract that will return \$20,000.00 annually at the end of each year for 15 years. What amount should Kilarny company pay for this investment if it earns a 6% return

#### Solution Preview

Problem #1
Smolinski company is considering an investment which will return a lump sum of \$5000,000 five years from now. What amount should simolinski company pay for this investment to earn a 15% return.

We are given the future value and we have to find the present value. The ...

#### Solution Summary

The solution calculates how much the Smolinski company has to pay for the investment to earn 15% by using the present value formula and also what amount should the Kilarny company pay for a 6% return using the PVIFA table. All steps are shown with brief explanations.

\$2.19