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Unformatted text preview: TIME VALUE MONEY - PRACTICE PROBLEMS t v m- p b s . d o c Written by Professor Gregory M. Burbage, MBA, CPA, CMA, CFM Please observe all copyright laws 1. For each of the following cases, indicate (a) to what number of periods and (b) to what interest rate columns you would refer in looking up the table factor. Number of Annual Years Invested Rate Compounded Future value of 1 table: Case A 8 6% Annually Case B 3 8% Semiannually Future value of an annuity: Case C 2 12% Monthly Case D 5 8% Quarterly Present value of 1: Case E 1 48% Bi-monthly 2 t i m e s p e r m o n t h Present value of an annuity: Case F 2 18% Monthly Problems 2-12 Drawing each problem and its respective cash flows will help you determine the type of problem and how to solve it. Therefore, for each problem, you should: (1) draw a timeline equal to the number of time periods indicated, (2) show the cash flows occurring at each time period as stated by the problem, and (3) put a question mark at the beginning of the timeline (present value problem) if you are trying to...
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