TVMCalculatorProblems

TVMCalculatorProblems - Time Value of Money Problems 1. If...

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Time Value of Money Problems 1. If you deposit $10,000 in a bank account that pays 10% interest annually, how much money will be in your account after 5 years? 2. What is the present value of a security that promises to pay you $5,000 in 20 years? Assume that you would earn 7% if you were to invest in securities of equal risk. 3. What is the future value of a 5 year annuity due that promises to pay you $300 each year? Assume that all payments are reinvested at 7% a year until year 5. 4. John has $42,180.33 in a brokerage account, and he plans to contribute an additional $5,000 to the account at the end of every year. The brokerage account has an expected annual return of 12%. If John’s goal is to accumulate $250,000 in the account, how many years will it take to reach his goal? 5. An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of year 4, $300 at the end of year 5 and $500 at the end of year 6. If the interest rate earned on the investment is 8%, what is its present value? What is its future value? 6.
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This note was uploaded on 03/02/2011 for the course BMGT 340 taught by Professor White during the Spring '08 term at Maryland.

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TVMCalculatorProblems - Time Value of Money Problems 1. If...

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