TIME VALUE OF MONEY PROBLEMS
Problems
1. In how many years $100 will become $265 if k = 11%?
265
ln
100
n
9.33844 9.34 years
ln(1 0.11)
2. In how many years will an amount double if k = 7.6%?
n
ln 2
9.46 years
ln 1.076
3. In how many years will an a

FIN 3414
Examination I
Spring 2012
1. Suppose Manij needs $ 138,000 to buy a new kitchen at the end of 2017. Assume that
Manij uses an account earning 2.45% yearly. What does Manij have to deposit at the
beginning of 2012, assuming monthly compounding?
a.

Chapter One
I: BASIC MATHEMATICAL TOOLS
As the reader will see, the study of the time value of money involves substantial use of variables and numbers that
are raised to a power. The power to which a variable is to be raised is called an exponent. For ins

FIN 3414
Examination I
Summer A 2010
1. Suppose 25 years ago your mother deposited $ 14,500 in an account earning 8% each year. Obtain todays value,
assuming semiannual compounding.
a. 103,046.91
b. 103,498.60
c. 106,416.36
d. 106,625.52
e. None of the ab

FIN 3414
Examination I Spring 2012
1. Suppose Manij needs $ 138,000 to buy a new kitchen at the end of 2017. Assume that Manij uses an account earning 2.45%
yearly. What does Manij have to deposit at the beginning of 2012, assuming monthly compounding?
a.

Chapter Six
THE TIME VALUE OF MONEY WITH MORE THAN ONE COMPOUNDING PER YEAR
Unlike the previous section where the compounding interval was annual (compounded annually), we will now
assume that the compounding intervals are purely arbitrary, say, up to m t

FIN 3414
Examination I Version A
Fall 2011
1. You inherited $55,000 from Auntie Paris. What is the maximum amount you can withdraw each year forever if the
interest rate is 7.5%?
a. 4,125
b. 4,225
c. 4,325
d. 4,425
e. None of the above
2. Suppose you need