time+value+of+money+practice+problems (1)

# time+value+of+money+practice+problems (1) - TIME VALUE OF...

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TIME VALUE OF MONEY PRACTICE PROBLEMS N I PV PMT FV QUESTIONS How much money will you have in your account in 5 years if you deposit \$3,000 today? You can earn 15% on your money. You are saving to buy a \$8,500 sound system. You currently have \$5,000 in a 7.5% money market account. If you make no further deposits, how long will it take you to reach your goal? What interest rate must you earn to double your money in 6 years? Rule: A zero coupon bond with a face value of \$100 matures in 10 years. How much are you willing to pay for this investment today if you want to earn 7% on your money? You want to be a millionaire in 20 years. What monthly amount must you invest at 15%? (see "2 brothers" ) An insurance salesman offers you an annunity that pays \$30,000 per year for 15 years. If the price of the annuity is \$215,000 and you can earn 12% on your current investments, should you purchase the annuity? You just won the \$10M lottery. Do you perfer \$500,000 per year starting today (for 20 yrs), or a lump sum of \$4.5M? R=12% Georgia Tech just received an endowment of \$5M for a scholarship program. What is the yearly distribution if the endowment earns 5% per year? The car salesman calculates your monthly payment to be \$275 on an

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## This note was uploaded on 02/09/2012 for the course MGT 3078 taught by Professor Marchman during the Spring '12 term at Georgia Institute of Technology.

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time+value+of+money+practice+problems (1) - TIME VALUE OF...

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