Practice Problems 1

# Practice Problems 1 - Time Value of Money Problems Handout...

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Time Value of Money Problems Handout 1 1. Today you deposited \$5000 into a savings account paying 12% interest. How much should you have in 15 years? 2. A loaf of bread today costs \$1.28. If grocery prices are going up at the rate of 8% per year, how much will a loaf of bread cost in 6 years? 3. The average price of new homes is \$138,500. If new home prices are increasing at a rate of 15% per year, how much will a new home cost in 12 years? 4. You deposit \$3,500 into an account every year for 6 years. The account pays 7% interest. How much will you have at the end of that time? 5. You deposit \$4,000 each year into a retirement account paying 8% interest. How much will you have in 25 years when you retire? 6. What is the present value of \$5,000 to be received in 7 years at an interest rate of 7%? 7. You can buy a parcel of real estate today that you estimate will bring \$15,000 in 9 years. Assuming your money is worth 9%, how much would you be willing to pay for the property? 8. An insurance company is willing to settle a dispute with you.

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## This note was uploaded on 03/16/2012 for the course FIN 300 taught by Professor Haroldwilliamson during the Spring '12 term at S. Alabama.

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Practice Problems 1 - Time Value of Money Problems Handout...

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