TVM_Practice_Set_Questions_Using_Factorsa

TVM_Practice_Set_Questions_Using_Factorsa - 1 TVM Practice...

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1 TVM Practice Set Using the Factors in the Tables: FV (Exhibit C- 2), FVA (Exhibit C-4), PV (Exhibit C-6), and PVA (Exhibit C-7). Set One are computational problems. Set Two are word problems. The answers to these practice problems are found after the problems. Set One: 1. What is the FV of $400,000 invested at 7% for 19 years? 2. What is the FV of $300 invested at 10%, compounded semi- annually, for 8 years? 3. What is the FV of $2,500 invested at 16% compounded quarterly for 5 years? 4. What is the FVA at the end of 8 years of $4,000 per year for 8 years invested at 8%? 5. The FV of an annuity is $10,000. Assume 14 payments are made at the end of each of the fourteen years and the rate of return is 8%, how much are the payments? 6. What is the PV of $6,500 received 10 years from now, assuming a 10% interest rate? 7. What is the PV of $6,500 received 1 year from now assuming a 12% interest rate? 8. What is the PVA of $20,000 per year for 17 years assuming an interest rate of 14%? 9. What is the annuity payment if the PV of the 16 year annuity is $40,000 and the interest rate is 5%?
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2 10. What would the payment be for a loan of $15,000 if the interest rate is 16% and the payments are quarterly for 20 months or 5 quarters? 11. What would the payment be for a loan of $15,000 if the interest rate is 12% and the payments are annually for sixteen years? 12. What is the NPV of the following cash flows assuming an interest (discount) rate of 4%? Year Cash Flow 0 -$150,000 1 40,000 2 40,000 3 40,000 4 40,000 13. Find the NPV of the following cash flows assuming a discount rate of 6% Year Cash Flow 0 -$250,000 1 150,000 2 60,000 3 75,000 Set Two: 1. Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to chose): 1. $8,000 per year at the end of each of the next eight years 2. $50,000 (lump sum) now 3. $100,000 (lump sum) eight years from now
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3 Evaluate each scenario assuming a 6% interest rate and then a
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This note was uploaded on 02/24/2010 for the course GB 112 taught by Professor Osterheld during the Spring '10 term at Bentley.

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TVM_Practice_Set_Questions_Using_Factorsa - 1 TVM Practice...

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