TVM_problems - Finance 254 Additional Time Value of Money...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Finance 254 Additional Time Value of Money Problems If I sell one of my kidneys for $5000 and deposit the proceeds in an account earning 7.25% per year, what amount will I have available in 7 years? That guy from N'Sync, Lance Something, wants to go to space. The Russian space program decides that, while they don't have any seats available on flights in the near future, they would be willing to send him flying into the center of the sun on a rocket they are currently building. The price is a bargain at $5M. Furthermore, the fee isn't due until he embarks on his voyage in 5 years. If Lance can earn a staggering 100% on his investments, how much does he need to save today? Mr.Frump is offered two investments and must decide which pays a higher interest rate: (A) Deposit $500 now and receive $1000 in 6 years. (B) Deposit $250 now and receive 10 annual payments of $45. Give Mr.Frump a hand and help him figure out the better option. Going to Spain: Mr.Frump is a precocious first year college student. He has already begun to plan a trip to Europe with the assumption he will graduate in four years.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern