THE EFFECTS OF TIME AND RISK ON VALUE
How much will a $50 deposit made today be worth in 20 years if the compound
rate of interest is 10 percent?
How much would you pay for the right to receive $80 at the end of 10 years if you
can earn 15 percent interest?
How much would you pay to receive $50 in one year and $60 in the second year
if you can earn 15 percent interest?
What amount invested at the end of each year at 10 percent annually will grow to
$10,000 at the end of five years?
How much would you pay for the right to receive nothing a year for the next 10
years and $300 a year for the following 10 years if you can earn 15 percent
What is the present value of $500 received at the end of each of the next three
years and $1,000 received at the end of the fourth year, assuming a required rate
of return of 15 percent?
If a landowner purchased a vacant lot six years ago for $25,000, assuming no
income or holding costs during the interim period, what price would the
landowner need to receive today to yield a 10 percent annual return?
What is the present value of the following series of cash flows discounted at 12
percent: $40,000 now; $50,000 at the end of the first year; $0 at the end of year
the second year; $60,000 at the end of the third year; and $70,000 at the end of the
Assume an income-producing property is priced at $5,000 and has the following
income stream (year 1, $1,000; year 2, -$2,000; year 3, $3,000; and year 4,
$3,000). Would an investor with a required rate of return of 15 percent be wise to
invest at the current price?