Homework+File+2+Week+3 - Time Value of Money Problems...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Time Value of Money Problems Example Future Value of a PRESENT Lump Sum What will $8,000 accumulate to when invested for 10 years at 10%? Sum Invested Tme Invested (years) Interest rate (%) FVIF Future Value (FV) $5,000 10 10% 2.594 $12,970 (Using Financial Tables) $5,000 10 10% $12,969 (Using Excel Function) Example Present Value of a FUTURE Lump Sum What is the Present Value of $1,000 to be received in 8 years from now, discounted back to the present at 3%. Sum Invested Years Discounted Interest rate (%) PVIF Present Value (PV) $1,000 8 3% 0.789 $789 (Using Financial Tables) $1,000 8 3% $789 (Using Excel Function) Example Future Value of an Annuity (FVA) What is the Future Value Annuity (FVA) of $100 deposited each year for 5 years, with an interest rate of 10% Payment (PMT) Duration of Annuity (Years) Compound Interest Rate FVIFA Future Value Annuity (FVA) $100 5 10% 6.105 $610.50 (Using Financial Tables) $100 5 10% $610.51 (Using Excel Function) Example What is the Present Value Annuity of $2,500 for 10 years discounted back to the present at 7%? Present Value of an Annuity (PVA)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/10/2012 for the course FINANCE 370 taught by Professor Jones during the Winter '08 term at University of Phoenix.

Page1 / 2

Homework+File+2+Week+3 - Time Value of Money Problems...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online