Part 1: Can You Use Your Calculator?
1.
What amount received at the end of 20 years is equivalent to $100 today, given an
opportunity cost of 14%?
2.
What amount received at the end of 15 years is equivalent to $100 received at the end of each
year for 15 years, given an opportunity cost of 12%?
3.
What present amount is equivalent to $100 received at the end of 5 years, given an
opportunity cost of 16%?
4.
What present amount is equivalent to $100 received at the end of each year for 8 years, given
an opportunity cost of 20%?
5.
Find the future value in two years of $100 that is deposited in an account which pays 12%
compounded monthly.
6.
Find the present value of $100 to be received at the end of two years if the discount rate is
12% compounded monthly.
7.
Find the present value of a perpetuity of $1500 per year given a 20% opportunity cost.
8.
If the present value of a perpetuity is $6000 and the discount rate is 8%, what is the amount
of the annuity payments?
9.
At an 8% rate of interest, how long does it take for a sum of money to double?
10. What is the rate of return on an investment if you lend $1000 and two years later are repaid
$1254.70?
11. What is the rate of interest on a $10,000 loan that is to be repaid in 10 equal annual
installments of $1,917 each?
12. What is the amount of the equal annual installments for a 10 year, $10,000 loan with a 20%
rate of interest?
13. You know you will need $25,000 at the end of 5 years.
How much would you have to have
deposit annually, starting at the end of the first year, into an account earning 10% to
accumulate the needed amount?
14. What if everything in Problem 13 is identical except that you begin your deposits
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 Spring '08
 French
 Time Value Of Money, Interest

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