Time Value Workshop Solutions

Time Value Workshop Solutions - BUSI 105 Time Value...

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Time Value Workshop 1. You estimate that your home will appreciate at the rate of 5% compounded annually. If your home is worth $300,000 today, how much should it be worth 10 years from now? FV = 300,000 * FVIF (5%,10,1) | -1 PV, 0 PMT, 10 N, 5 I/Y, CPT FV = 1.6289 = 300,000 * 1.6288946 = $488,668.39 2. If you could earn 8% compounded monthly, what is the most you should be willing to give up in return for receiving a. a lump sum of $10,000 six years from now? PV = 10,000 * PVIF(8%,6,12) | -1 FV, 0 PMT, 6*12=N, 8/12=I/Y, CPT PV = 0.6198 PV = 10,000 * 0.6197669 = $6,197.70 b. a $100 monthly annuity for the next six years? PV = 100 * PVIFA(8%,6,12) | -1 PMT, 0 FV, 6*12=N, 8/12=I/Y, CPT PV = 57.0345 PV = 100 * 57.0345221 = $5,703.45 3. How much would you need to put away quarterly for the next 30 years in order to accumulate $1,000,000 at the end of that period? Assume you can earn 10% per year with quarterly compounding. PMT
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This note was uploaded on 04/04/2012 for the course BUSINESS 105 taught by Professor Luann during the Spring '08 term at uot.

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Time Value Workshop Solutions - BUSI 105 Time Value...

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