FGB380
Time Value of Money
Practice Problems
1.
What is the future value of $25,000 received today if it is invested at 6.5% compounded annually for six years?
2.
How much would you have to invest today at 8% compounded annually to have $25,000 in 4 years?
3.
You are going to receive $1000 four years from today.
If the discount rate is 5% compounded annually, what
will be the present value of the $1000
two years from today
?
4.
You estimate that you will need about $80,000 to send your child to college in eight years.
You have about
$35,000 now.
If you can earn 20% per year, will you make it?
At what interest rate will you just reach your
goal?
5.
An investment offers $2,500 per year for 8 years, with the first payment occurring one year from now.
If the
required return is 10%, what is the value of the investment?
6.
You will deposit $2,500 per year in an account earning 10%, with the first payment occurring one year from now.
How much will be in the account at the end of 8 years?
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This note was uploaded on 10/11/2010 for the course F 61364G911 taught by Professor Susancrain during the Spring '10 term at Missouri State UniversitySpringfield.
 Spring '10
 SUSANCRAIN

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