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 University-Springfield.