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    Time Value of Money (TVM) calculations

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    Problem 20.

    You need $23,956 at the end of nine years, and your only investment outlet is a 7 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year.

    a. What single payment could be made at the beginning of the first year to achieve this objective?

    b. What amount could you pay at the end of each year annually for nine years to achieve this same objective?

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    Solution Preview

    a. What single payment could be made at the beginning of the first year to achieve this objective?

    $23,956 at the end of 9 years
    We calculate the present value of this amount, this will be equal to the single payment at the beginning of the first ...

    Solution Summary

    Answers to Time Value of Money (TVM) questions.

    $2.49

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