Future Value Questions and Answers

Get help with your Future value homework. Access the answers to hundreds of Future value questions that are explained in a way that's easy for you to understand. Can't find the question you're looking for? Go ahead and submit it to our experts to be answered.

Study tools on Study.com
30,000+ Video Lessons
2,000,000+ Questions and Answers
65,000+ Quizzes
Copyright

Future Value Questions and Answers

Test your understanding with practice problems and step-by-step solutions. Browse through all study tools.

Your coin collection contains 57 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2055, as...
True or false? Comparing current returns with future returns without accounting for the time value of money will overstate the relative value of the future returns.
Sarah opens an investment account with an initial deposit of $1900. She then sets up monthly deposits of $100 to the account. If the account earns 4.5% interest compounded monthly, how much money w...
You are depositing $18,000 in a retirement account today and expect to earn an average return of 6% per year on this money. How much additional income will you earn if you leave the money invested...
You would like to have $1,000,000 forty years from now, but the most you can afford to invest each year is $1,200. What annual rate of return will you have to earn to reach your goal?
What is the future value at the end of year 4 of the following project? Assume an interest rate of 8%. || Year || Cash Flow | 1 | $1,000 | 2 | $2,000 | 3 | $3,000 | 4 | $4,000
If you invest $100 a year for 20 years at 5% annual interest, how much will you have at the end of the 20th year?
You have won a contest that will pay you $10,000 a year at the end of each of the next 5 years. Based on a discount rate of 8% per year, what is the annuity worth to you today? (Show all calculati...
In 2018, you earned a salary of $55,000. You expect to be given 4% annual merit increases on January 1 of each year for the foreseeable future. What is your projected annual salary in 2023? (Show...
What is the future value of $1,000 after six months of earning 12% annually? A. $1,050.00 B. $1,120.00 C. $1,058.30
Why is the concept of the time value of money important for companies when considering what type of debt instrument (bond) they should issue to raise capital?
What is the future value of $1,000 after six months of earning 12% annually? A. $1,050.00 B. $1,060.00 C. $1,120.00 D. $1,058.30
Gary received a bonus of $8,000. He gave his son $720 and invested the remaining amount into a savings account earning 3% interest compounded quarterly. If he leaves the money in the account for 5...
Mr. Funperson will graduate from college before his 25th birthday and start his first professional job immediately upon his graduation. Mr. Funperson decides to set up a retirement account and make...
Franella wants to buy her dream car when she retires in 14 years. She deposits $20,000 in an account paying 8.4% interest compounded monthly. How much will she have to put towards her dream car at...
A debt of $4,000 is repaid by payments of $1,500 in nine months, $2,000 in 18 months, and a final payment in 27 months. If the interest was 10% compounded quarterly, what was the amount of the fina...
Curtis is 19 and wants to start saving money for retirement. He deposited $8,000 in an account earning 6% interest compounded semiannually. At the end of 50 years, how much will he have in the acco...
How much money would accumulate to $25000 at 4.5% compounded semi-annually in five years, four months?
What is the future value exactly 29 years from today of a deposit of $4,832 made today into an account that pays interest of 10% p.a.?
Why is the concept of the time value of money important for companies when considering investing in assets?
In 1880, five aboriginal trackers were each promised the equivalent of 100 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 1993, the granddaughters of two of the track...
A 22 year old borrowed $4000 under a student loan 4 years ago when the i=4.06% per year. $5000 was borrowed 3 years ago at 3.42%, 2 years ago she borrowed $6000 at 5.23%, and last year she borrowed...
If the income tax rate for a profitable company is 30%, a depreciation deduction of $10,000 results in a tax savings of $7,000 (before considering time value of money). True or false?
If the required rate of return increases, what is the impact on the future value of an annuity?
The Wellington family has an offer to sell a plot of land to Land Developers, Inc. (LDI) for $1,000,000. However, to allow LDI time to generate the required payment from its operations, the Welling...
In 6 years you wish to have a sinking fund of $18,000. How much will you have to deposit each quarter if interest is 12% compounded quarterly?
What annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $72,500 in five years?
What annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $78,000 in six years?
What annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $83,500 in six years?
What is the future value of a $1,000 investment after 20 years if it pays an interest rate of 11.5% compounded continuously?
What is the future value of a $1,000 investment after 10 years if it pays an interest rate of 11.5% compounded continuously?
What is the future value of a $1,000 investment after 3 years if it pays an interest rate of 11.5% compounded continuously?
Kinky Copies may buy a high-volume copier. The machine costs $190,000 and will be depreciated straight-line over 5 years to a salvage value of $32,000. Kinky anticipates that the machine actually c...
You have some property for sale and have received two offers. The first offer is for $65,000 today in cash. The second offer is for the payment of $35,000 today and an additional $50,000 two years...
Assume that you will deposit $4000 at the end of each of the next three years in a St. George bank account paying 8% interest. You currently have $7000 in the account. How much will you have in thr...
When Jamal graduated from college recently, his parents gave him $1,650 and told him to use it wisely. Jamal decided to use the money to start a retirement account. After doing some research about...
What concept states that the timing of the receipt or payment of a cash flow will affect its value to the holder of the cash flow?
All else equal, time preference is the desire to: A. have goods and services that are made in the current year. B. delay the purchase of goods and services. C. have goods and services in retirement...
What would be the value of a savings account started with $1340, earning 7 percent interest (compounded annually) after 9 years?
What would be the value of a savings account started with $1340, earning 10 percent interest (compounded annually) after 9 years?
If you invest $3,000 today at an interest rate of 5.5%, compounded daily, how much money will you have in your account in 5 years?
If you invest $3,000 today at an interest rate of 5.5%, compounded monthly, how much money will you have in your account in 10 years?
If you invest $3,000 today at an interest rate of 5.5%, compounded monthly, how much money will you have in your account in 5 years?
What is the future value of $1,690 in 16 years assuming an interest rate of 8.00 percent compounded semiannually?
Ten years ago, Hailey invested $3,200 and locked in an 8 percent annual interest rate for 20 years (ending 10 years from now). Aidan can make a 10-year investment today and lock in a 10 percent int...
If you invest $3,000 today at an interest rate of 5.5%, compounded monthly, how much money will you have in your account in 2 years?
If you invest $3,000 today at an interest rate of 5.5%, compounded annually, how much money will you have in your account in 2 years?
If you invest $3,000 today at an interest rate of 5.5%, compounded annually, how much money will you have in your account in 5 years?
Linda Roy received a $201,000 inheritance after taxes from her parents. She invested it at 4.5% interest compounded quarterly for 4 years. A year later, she sold one of her rental properties for $2...
How many years will it take for $2841 to grow to $4600 at an annual interest rate of 10%?
If you invest $20,000 now and your investment pays 5% per annum, how much will you have in 20 years if compounded quarterly?
Calculate the future value of $5,000 in 10 years if the interest rate is 12% compounded continuously.
If you invest $20,000 now and your investment pays 5% per annum, how much will you have in 20 years if compounded annually?
If you invest $20,000 now and your investment pays 5% per annum, how much will you have in 20 years if compounded monthly?
How many years will it take for $34,300 to grow to $225,428 at an annual interest rate of 22%?
How many years will it take for $34,605 to grow to $396,120 at an annual interest rate of 15%?
How many years will it take for $1150 to grow to $2005 at an annual interest rate of 12%?
What would be the value of a savings account started with $1340, earning 4 percent (compounded annually) after 9 years?
Calculate the future value of $5,000 in 2 years if the interest rate is 12% compounded monthly.
Calculate the future value of $5,000 in 5 years if the interest rate is 12% compounded monthly.
Calculate the future value of $5,000 in 10 years if the interest rate is 12% compounded annually.
Calculate the future value of $5,000 in 5 years if the interest rate is 12% compounded annually.
Calculate the future value of $5,000 in 5 years if the interest rate is 12% compounded continuously.
You can select one of the two options below. If the interest rate is 5%, which one should you take? a. $5,000 at the end of year 1 b. $2,000 per year for the next three years (the first payment at...
Calculate the future value of $5,000 in 2 years if the interest rate is 12% compounded continuously.
Calculate the future value of $5,000 in 2 years if the interest rate is 12% compounded annually.
You are interested in investing a $15,000 gift from your grandparents for the next 10 years in a mutual fund that will earn an annual return of 7%. What will your investment be worth at the end of...
What is the future value of a $1,000 investment after 5 years if it pays an interest rate of 12% compounded annually?
What is the future value of a $1,000 investment after 20 years if it pays an interest rate of 11.7% compounded semiannually?
How much will you have at the end of 20 years if you invest $100 today at an interest rate of 15% compounded quarterly?
How much will you have at the end of 20 years if you invest $100 today at an interest rate of 15% compounded monthly?
What is the future value of a $1,000 investment after 10 years if it pays an interest rate of 11.7% compounded semiannually?
What is the future value of a $1,000 investment after 3 years if it pays an interest rate of 11.7% compounded semiannually?
What is the future value of a $1,000 investment after 5 years if it pays an interest rate of 11.7% compounded semiannually?
How much will you have at the end of 20 years if you invest $100 today at an interest rate of 15% compounded semiannually?
What is the future value of a $1,000 investment after 20 years if it pays an interest rate of 12% compounded annually?
You are interested in investing a $15,000 gift from your grandparents for the next four years in a mutual fund that will earn an annual return of 8%. What will your investment be worth at the end o...
Calculate the future value of $4,000 in 8 years if the interest rate is 6.4% compounded annually.
Calculate the future value of $2,000 in 22 years if the interest rate is 8.4% compounded annually.
Calculate the future value of $4,500 in 15 years if the interest rate is 8.4% compounded annually.
What is the future value of a $1,000 investment after 10 years if it pays an interest rate of 12% compounded annually?
What is the future value of a $1,000 investment after 3 years if it pays an interest rate of 12% compounded annually?
Calculate the future value of $2,500 in 12 years if the interest rate is 6.4% compounded annually.
How much will you have at the end of 20 years if you invest $100 today at an interest rate of 15% compounded annually?
Calculate the future value of $7,000 in 11 years if the interest rate is 8.4% compounded annually.
You have $10,000 to invest at an annual interest rate of 5%, and you will keep the money invested for 10 years. What will this amount grow to?
You have $10,000 to invest at an annual interest rate of 7%, and you will keep the money invested for 15 years. What will this amount grow to?
You have $10,000 to invest at an annual interest rate of 6%, and you will keep the money invested for 12 years. What will this amount grow to?
Assuming an 8% discount rate, what is the future value of the following cash flows? a. Future value in 3 years of $50 received now. b. Future value in 100 years of $50 received now. c. Future value...
A developer is considering including a private waste water treatment plant in a small residential development. The city requires the developer to provide funds to cover the construction cost of the...
Suppose that you invest $5,000 each year for 5 years and that you expect to earn an interest rate of 5.5%. How much money should you have in 15 years? Show all work.
The future value of $100, received today, and deposited at 6 percent for four years is closest to _____.
What is the future worth of a series of equal year-end deposits of $3,000 for 13 years in a savings account that earns 12% annual interest if the following were true? (a) All deposits are made at t...
Small differences in growth rates are magnified over time because growth is _______________. A. increasing B. compounded C. simple D. miscalculated
Explain the importance of time value of money in business finance.
If a technology will make you earn $1,300 per month beginning 3 months from now, how much could you afford to spend now to implement the technology at an interest rate of 12% per year, compounded m...
Lisa plans to retire on her 61st birthday. On her 22nd birthday, Lisa will start saving $A per year for 40 years. Starting on her 62nd birthday, Lisa plans on withdrawing $10,000 and will continue...
A young couple wishing to save money for their child's first year in college purchases an insurance policy that will yield $10,000 fifteen years from now. The cost of the policy is $500 per year fo...
Elliot makes $250,000 a year and pays 30% taxes on $150,000 and 35% on his remaining salary. His expenses are $110,000 (per year). He wants to invest a fixed amount every day into an investment fun...
Elliot makes $250,000 a year and pays 30% taxes on $150,000 and 35% on his remaining salary. His expenses are $110,000 (per year). He wants to invest a fixed amount every day into an investment fun...
You've just deposited $8,000 in a savings account to save for a new car that you want to buy in 7 years. a) How much money will you have in 7 years if the interest rate is 5%? b) How much money wil...
An alumnus has donated $4,000,000 to the Poole College of Management. The College plans to invest this donation in an account earning 10% compounded annually for at least five years before using th...
Ridhi Sidhi Jewellers has identified an investment project with the following cash flows, denominated in thousands of rupees. If the discount rate is 8 percent, what is the future value of these ca...
Instead of talking about present value, some economists talk about future value. Since a dollar received at time t and invested at interest rate r turns into e^r(T-t) dollars at time T, we will tre...
A chair with a retail price of $188 can be purchased with a one-year loan at 10% annual simple interest. What is the maturity value?
What is the ordinary interest on a loan of $2,800 at 10% annually made on March 15 for 270 days?
Sally deposited $100 a month in her savings account for 24 months. For the next 5 years, she made no deposits. What is the future worth of Sally's savings account at the end of 7 years, if the acco...
This is a classic retirement problem. A friend is celebrating her birthday and wants to start saving for her anticipated retirement. She has the following years to retirement and retirement spendin...
A young engineer's starting salary is $75,000. The engineer expects annual raises of 2%. The engineer will deposit 15% of the annual salary at the end of each year in an investment account that ave...
You open an account today with $20,000 and at the end of each of the next 15 years, you deposit $2,500 in it. At the end of 15 years, what will be the balance in the account if the interest rate is...
Part of the income that a machine generates is put into a sinking fund to pay for the replacement of the machine when it wears out. If \$ 3,000 is deposited every year at 6\% interest compounded an...
On January 1, 2009, you plan to take a trip around the world upon graduation four years from now. Your grandmother wants to deposit sufficient funds for this trip in a savings account for You. On t...
An insurance company is offering a new policy. The parent makes the following six payments to the insurance company and no more payments after the child's sixth birthday. When the child reaches age...
If the IBX stock market price is equal to its intrinsic value, what is next year s expected price?
The cost of a toll road is $10 million with a profit of $1.5 million per year. If the discount rate is 10%, how many years will it take to pay for the road?
Jeff, a local traffic engineer, has designed a new pedestrian footbridge that is capable of handling the current traffic rate of 220 pedestrians daily. Once the traffic rate reaches 1,000 pedestria...
Create a model, how much will be in the account in 50 years? The future value of an investment is the amount it will be worth after so many months or years of earning interest. The following table...
A series of equal quarterly payments of $10,000 for 15 years is equivalent to what future worth amount at an interest rate of 6% compounded at the given intervals? A) quarterly B) monthly C) contin...
Suppose that installation of a low-loss thermal window in your area is expected to save $350 a year on your home heating bill for the next 18 years. If you can earn 8% per year on other investments...
It is now January 1, 2010. Today you will deposit $1,500 into a savings account that pays 6% interest. If the bank compounds interest annually, how much will you have in your account on January 1,...
Mr. Miller's third question is with regards to his daughter Kate's education. Kate is 8 years old today. She will be in college when she turns eighteen, that is, ten years from today. By that time,...
It is now January 1, 2010. Today you will deposit $1,500 into a savings account that pays 6% interest. If the bank compounds interest annually, how much will you have in your account on January 1,...
A new company financed their office furniture through the furniture dealer from which he bought it. The dealer's terms allowed the company to defer payments (including interest) for six months and...
It is now January 1, 2009. Today you will deposit $2,000 into a savings account that pays 8%. If the bank compounds interest annually, how much will you have in your account on January 1, 2019?
The Present Worth amount of a series of annual payments extending over a period of 20 years is $25,000. The equivalent annual amount of the series of payments is $2,000 per year. What is the rate o...
You currently live (rent free) in your parents' basement but it's a bit awkward when you bring dates home. Your friends are looking for a new roommate and have asked if you're interested in moving...
If you pay the minimum payment of 2% per month (not less than $25), assuming you make no other purchases with your credit card, how long would it take to pay off the balance? You are broke and furn...
Derek is 45 years old and works as a radio producer for the CBC. He's done a decent job so far saving for retirement and has $20,000 in his RRSP along with another $150,000 in his employer's define...
While vacationing in Knysna, John Kelley saw the vacation home of his dreams. It was listed with a sale price of R200000. The only catch is that John is 40 years old and plans to continue working u...
Two mutually exclusive projects, Q and R, have the estimated cash flows shown below. [TABLE] Use a future worth analysis to determine which should be selected at an interest rate of 10% per year. Q...
The city of Metropolita added a new subway station in a neighborhood between two existing stations. After the station was built, the average house price increased by $10,000 and the average commute...
You own forest land in California. You estimate that California's forest practice regulations will impact you financially in the following ways: - Cost of a forest management plan is $100 per acre...
You are offered an annuity that pays $2,000 annually at the end of each of the next 10 years. If the discount rate is 4%, what should be the price (value) of the annuity today?
Morris Glass Company has decided to invest funds for the next 5 years so that the development of "smart" glass is well funded in the future. This type of new-technology glass uses electro-chrome co...
Someone plans to invest in securities that pay 9.0%, compounded annually. If he invests $5,000 today, how many years will it take for his investment account to grow to $9,140.20? Show your calculat...
Consider a second alternative for accumulating funds to buy the new billing system. In lieu of a lump sum investment, assume that five annual payments of $32,000 are made at the end of each year....
You are approached by a big software house which wants to purchase the right to produce and distribute the software. For what minimum price would you be willing to sell the software?
A dollar in hand today is worth more than a dollar to be received next year, assuming interest rates are positive. Discuss.
If the interest rate is 7.5 percent, then what is the present value of $4,000 to be received in 6 years?
Find the amount of six uniform annual deposits that can provide a single withdrawal of $40,370.92 four years after the last deposit is made at an interest rate of 10% per year.
Calculate the future value of $1,200 after 2 years assuming an annual interest rate of 7%.
Calculate the future value of $600 after 3 years assuming an annual interest rate of 7%.
Suppose I invest $800 one year from now into a fund that pays 8% interest. The following year I invest $700, then $600, etc., and stop investing when the payment is down to zero. What will the fund...
Calculate the future value of $600 after 4 years assuming an annual interest rate of 7%.
Calculate the future value of $1,200 after 4 years assuming an annual interest rate of 7%.
Calculate the future value of $1,800 after 3 years assuming an annual interest rate of 7%.
Calculate the future value of $1,200 after 3 years assuming an annual interest rate of 7%.
A financial advisor tells you that you can make your child a millionaire if you just start saving early. You decide to put an equal amount each year into an investment account that earns 9% interes...
Yani has $12,000 for investment purposes. His bank has offered the following three choices: Choice 1: A special savings certificate that will pay $145 each month for 5 years and a lump sum payment...
You would like to have $37,000 in 1616 years. To accumulate this amount you plan to deposit each year an equal sum in the bank, which will earn 99 percent interest compounded annually. Your first p...
Suppose you purchase a call option to buy IBM common stock at $35 per share in September. The current price of IBM is $37 and the option premium is $4. What is the intrinsic value of the option?
Compound the competitor's offer of a single payment of $53,000 forward 5 years at 7.45% and compare its FV with the FV of your 5 end-of-year payments at 7.45%. In other words, the potential account...
The intrinsic value (not market value) of an asset is the present value of all expected cash flow it is expected to generate. Identify and carefully explain at least three principles of finance in...
A company will need $100,000 in five year's time to replace one of its production lines. Assuming the company can earn 7% per year compound interest on its savings, how much should the company be s...
Parents deposit $5,000 into a savings account at the end of each year for 22 years to help their child pay for college. The savings account pays 7% interest per year, compounded monthly. The child...
What is the future value of $1,500 in 5 years if the interest rate is 10% with semiannual compounding?
Assuming a rate of 20% annually, find the future value of $1,000 after 3 years.
What is the present value of $1,500 due in 5 years if the interest rate is 10% with semiannual compounding?
Assuming a rate of 5% annually, find the future value of $1,000 after 5 years.
Assuming a rate of 5% annually, find the future value of $1,000 after 3 years.
$20,000 is deposited in an account that earns 6% per year compounded yearly. The money accumulates in the account until the end of year 6 at which time a $10,000 withdrawal is made. The remainder s...
Calculate the future value of $1,000 after 2 years assuming an interest rate of 5% compounded annually.
Calculate the future value of $1,000 after 4 years assuming an interest rate of 20% compounded annually.
Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?
If I make an initial investment of $7000 at 12% per year compounded yearly. a. How much would it be worth in 3 years? b. Draw a cash flow diagram of what this would look like.
An educational saving account is created. The account is set up such that the beneficiary will receive all money in the account (principal as well as all accrued interest) after 16 years from the p...
By filling carbon nanotubes with miniscule wires made of iron and iron carbide, incredibly thin nano wires could be extruded by blasting the carbon nanotubes with an electron beam. If Gentech Techn...
Suppose you are offered the alternative of receiving either $2,007 at the end of five years or $1,500 today. There is no question that the $2,007 will be paid in full (i.e., there is no risk). Assu...
A $5,800 balance in a tax-deferred savings plan will grow to $18,398.76 in 15 years at an 8% per year interest rate. What would be the future worth if the $5,800 had been subject to a 33% income ta...
1. For what value of P in the cash flow does the present value equal to 0? 2. A debt of $5000 can be repaid, with interest at 8%, by the following payments.
Since he can only begin withdrawing from his retirement account after age 59 and he expects to live to the average life expectance of 88 years, what is the equivalent uniform annual amount he can w...
Bob invested $2,000 in an investment fund on his 21st birthday. The fund pays 7% interest compounded semiannually. Bob is celebrating his 50th birthday today. Bob decides he wants to retire on his...
Define present value completely and give examples.
Interest rate for an annuity Personal Finance Problem Anna Waldheim was seriously injured in an industrial accident. She sued the responsible parties and was awarded a judgment of $2,500,000. Today...
The time value of money is an important area within finance, let's discuss the concept involved with moving money forward (compounding) or moving the value of money back (time discounting). Why is...
Cousin Clara has been doing some additional research on the funding for the You Go Girl Foundation. Due to the election results, she feels it is likely that there will be budget cuts that will aff...
At the beginning of every year since 2010, you have been putting $1000 into a savings account that earns 1% interest per year. \\ (a) Write an expression for the amount of money in the account at...
A couple starts saving for their retirement by putting $1000 at the end of this year and increasing the savings by 5% each year. If the savings earn 6% annual interest, what would be the value of t...
Peter arranged for a loan from the Credit Union managed by Wendy and John. This loan was obtained to provide financial support for his fast-growing family. He is supposed to receive Php 200,000 now...
You have $35,259.87 in a brokerage account, and you plan to deposit an additional $2,500 at the end of every future year until your account totals $350,000. You expect to earn 11.7% annually on the...
What is the Future Value at year 8, of a $3,000 inflow at time zero (instantly), and a $1,000 outflow 6 years from now, and a $4,000 inflow 7 years from now.
On January 1, 2000, $11, 642 was deposited into an account that earns 6.62% interest compounded monthly. On January 1, 2009, $1, 900 was withdrawn from the account and the bank changed the interest...
Farmer Prospero is 50 (assume he just turned 50) and plans to retire at 65 (at the end of his 65th year). Prospero thinks his farm will be worth $5,000/acre by the time he retires. He views his far...
As an avid fisherman, you have the option of purchasing a lifetime fishing license, which gives you fishing privileges in Minnesota for the rest of your life. You assume you will be fishing in Minn...
To purchase a new car, you borrow $25,550. A car dealer offers a five-year loan at an interest rate of 4% compounded annually. If you make only one payment at the end of the loan period, repaying t...
Determine the number of periods for which the following annuity payments would have to be invested to accumulate to $20,000. Assume payments are made at the end of each period. Convert the number o...
Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment...
You are age 20 and have decided to take the bull by the horns and start planning for your retirement in 40 years (age 60). You would like to have $1,000,000 in today's dollars saved to live from wh...
Your coin collection contains 54 silver dollars minted in 1940. If your grandparents purchased them for their face value in the year they were minted, how much will your collection be worth when yo...
Alpha Electronics can purchase a needed service for $85 per unit. The same service can be provided by equipment that costs $95,000 and that will have a salvage value of zero at the end of 10 years....
A principal sum of money, P, is invested at a nominal interest rate, r, and compounded m times per year for t years. What amount, F, will be accumulated at the end of this period of time?
Housing prices have been rising by 6% per year. A house now costs $175,000. What would it have cost 10 years ago? (Round the answer to the nearest cent.)
Mr. Jones plans to invest $500 per month for the next five years in a mutual fund averaging an annual return of 10%. At the end of the five years, Mr. Jones wants to invest the entire amount to yie...
Find the amount to which $200 will grow under each of the following conditions. Why does the observed pattern of future values occur? a. 4% compounded annually for 9 years b. 4% compounded semiannu...
Find the present and future value of an income stream of $5000 per year for a period of 10 years if the interest rate, compounded continuously, is 4% Present value = Future value = How much of th...
Find the present and future values of an income stream of $4,000 a year for 23 years. The interest rate is 4%, compounded continuously.
What annual rate of return is earned on a $2,500 investment when it grows to $5,500 in twelve years? a. 6.25% b. 6.79% c. 2.20% d. 1.20%
Calculate the future value of $1,500 in 10 years assuming an interest rate of 13% (APR) compounded quarterly. Also, calculate the effective annual rate (EAR) on the investment.
Your church has decided that one of its missions will be to provide assistance to those members that demonstrate a need for assistance to attend local community colleges. The board decided to set-u...
If you invest $250 per month at the beginning of each month for the next 10 years into an account earning 7% annually, how much will you have in exactly ten years?
A newborn chief receives a $9,000 gift toward a college education from her grandparents. How much will the $9,000 be worth in 19 years if it is invested at 7.5% compounded quarterly?
A newborn child receives a $8,000 gift toward college. How much will the $8,000 be worth in 17 years if it is invested at 5% compounded quarterly?
A newborn child receives a $4,000 gift toward a college education from her grandparents. How much will the $4,000 be worth in 19 years if its invested at 6.5% compound quarterly?
What is the time value of the money invested in stocks if we didn't trade our stocks? Do all companies pay dividends for stocks?
What can be ascertained through the rule of 72? 1 answer below What can be ascertained through the rule of 72?
If a company borrowed $4.000 on January 1st at an annual rate of interest of 8% and a term of 2 years. how much Interest expense would it record for year 2, assuming it made no payments on the loan...
In 1970, when Wal-Mart Stores, Inc. went public, an investment of 100 shares cost $1,650. That investment would have been worth $12,283,904 on January 31, 2002. What is the rate of return on that i...
At the end of each year, a self-employed person deposits $1,500 in a retirement account that earns 10 percent annually. a) How much will be in the account when the individual retires at the age of...
On Earl's 5th birthday his dad received a big raise at his current job. He thought maybe he could now afford to deposit $50 a month into an account to help pay for Earl's education. He just happene...
Lovie inherited $6,000. She would like to use this money to buy Thurston a new ascot costing $7,000 for their 10th anniversary celebration which will take place in 2 years from now. Will Lovie have...
In order to update a production process, a company can spend money now or four years from now. If the amount now would be $10,000, what equivalent amount could the company spend four years from now...
Assume that $10,000 is invested in a single asset that returns 7% annually for twenty-five years and $2,000 is placed in five different investments, earning returns of 100%, 0%, 5%, 10%, and 12%t,...
What is the value today of a $42,000 cash flow expected to be received 17 years from now based on an annual interest rate of 8%? a. $155,401 b. $17,594 c. $9,081 d. $11,351
What is the value in year 15 of a $260 cash flow made in year 4 if interest rates are 12 percent?
To stay "even" (same purchasing power) with inflation forecast at 4.7% per year, what would your salary need to be in 10 years if you currently earn $52,092 per year? Key your answer in as a positi...
To stay "even" (same purchasing power) with inflation forecast at 4.7% per year, what would your salary need to be in 12 years if you currently earn $54,233 per year? The answer should be a positiv...
What is the value in year 12 of a $700 cash flow made in year 6 when the interest rates are 11 percent?
What is the value in year 10 of a $2,000 cash flow made in year 6 when the interest rates are 12 percent?
What is the value in year 12 of a $1,200 cash flow made in year 6 when the interest rates are 12 percent?
For the cash flows shown, calculate the future worth in year 8 using i 10 per year Year 0 1 2 3 4 5 6 Cash Flow 100 100 100 100 100 300 300
How much money will have accumulated in his account after 26 years?
At 10.38% compounded annually, how long (how many years) will it take $631 to double?
Suppose that, to cover some of your college expenses, you are obtaining a personal loan from your uncle in the amount of $20,000 (now) to be repaid in two years. If your uncle could earn 10% inter...
At 7.5 percent interest, how long does it take to double your money? At 7.5 percent interest, how long does it take to quadruple it?
In 1895, the first of a sporting event was held. The winner's prize money was $160. In 2007, the winner's check was $1,180,000. (a) What was the percentage increase per year in the winner's check o...
In 1895, the first Putting Green Championship was held. The winner's prize money was $240. In 2014, the winner's check was $1,400,000. What was the percentage increase per year in the winner's chec...
In 1895, the first Putting Green Championship was held. The winner's prize money was $240. In 2014, the winner's check was $1,440,000. What was the percentage increase per year in the winner's chec...
In 1895, the first Putting Green Championship was held. The winner's prize money was $180. In 2014, the winner's check was $1,380,000. What was the percentage increase per year in the winner's chec...
In 1895, the first Putting Green Championship was held. The winners prize money was $240. In 2014, the winner's check was $1,440,000. What was the percentage increase per year in the winners check...
Annual end of year deposits are made to a fund paying an annual effective rate of interest of 6%. The first deposit is $1,000 and then they go u by 3% annually. Interest from the 6% account is paid...
The following cash flow diagram shows the plan to spend development money, amount D, over 4 periods and then begin to receive revenue during the following 4 periods. Using the factors, write the eq...
Consider a second alternative for accumulating funds to buy the new billing system. In lieu of a lump sum investment, assume that five annual payments of $32,000 are made at the end of each year. S...
What factors must be considered when calculating present and future values? What other qualitative factors play into present and future value decisions? Perhaps you have opportunities in your prof...
You can earn 0.49 per cent per month at your bank. If you deposit $3,200, how long must you wait until your account has grown to $6,200?
A deposit of $410 earns the following interest rates: a. 8% in the first year. b. 6% in the second year. c.5 % in the third year. What would be the third year future value? (Round your answer to 2...
A deposit of $250 earns the following interest rates: a.10% in the first year. b. 8% in the second year. c. 7% in the third year. What would be the third year future value? Round your answer to two...
Upon the death of his uncle, Lucien receives an inheritance of $80,000, which he invests for 18 years at 6.1%, compounded continuously. What is the future value of the inheritance?
Bill plans to retire in 27 years. He currently has saved $300,00 and he believes he will need $1,000,00 at retirement. What annual interest rate must Bill earn to reach his goal assuming he does no...
Bill plans to retire in 17 years. He currently has saved up $200,000, and he believes he will need $1,000,000 at retirement. What annual interest rate must Bill earn to reach his goal, assuming he...
How long will it take $200 to double, if compounding occurs once a year at 7%?
Bill has been investing $10,000 at the beginning of each year for the past 7 years. How much has he accumulated assuming he has earned 7% compounded annually on is investment? a. 73,299 b. 92,598...
Mr Blucher is creating a college investment fund for his daughter. He will put in $8,000 per year for the next 18 years and expects to earn a 6% annual rate of return. How much money will daughter...
Marcy placed $2,500 a year into an investment returning 8 percent a year for her daughter's college education. She started when her daughter was 6. How much did she accumulate by her daughter's 18t...
Suppose that a firm wishes to create an endowment for a Library. It will earn an interest of 12% per year. Cash requirement are estimated to $450,000 (to establish it), $80,000 per year indefinitel...
The Mississippi Department of Corrections is evaluating two options for the 4 major Mississippi prisons. It can increase funding now for $7.0 M or it can wait 4 years when the bonds is expected to...
Scuba Steve has $ 4,800 that he wants to invest for 4 years. He can invest this amount at his credit union and earn 4 percent simple interest. Or, he can open an account at Compass Bank and earn 3....
Mortgage Balances Consider a 15-year $210,000 mortgage with a 7 percent interest rate. After 10 years, the borrower (the mortgage issuer) pays it off. How much will the lender receive?
A truck can be purchased today for $35,000. TAC company needs to purchase a truck in 2 years. If the price of the truck increases exactly in accordance with an estimated inflation rate of 6 % per y...
Your uncle is looking to double his investment of $10,000. He claims he can get earn 14 per cent on his investment. How long will it take to double his investment? Use the Rule of 72 and round to t...
Assume that you can invest to earn a stated annual rate of return of 10 percent, but where interest is compounded semiannually. If you make only 40 consecutive semiannual deposits of $500 each for...
your finance textbook sold 47,000 copies in its first year. the publishing company expects the sales to grow at a rate of 22.0 percent for the next three years, and by 5.0 percent in the fourth yea...
Your grandmother gave you $200 for your birthday, which you invested in a mutual fund on January 1, 2012. On June 1, 2012, she gave you $610 for your high school graduation, which you immediately d...
You plan to retire in 10 years. Would it be better for you to save $27,500 a year for the last five years before retirement or $16,250 for each of the 10 years? You are able to earn 9 percent inter...
Show work for the following scenarios. 1. Marry wants to help pay for her grandchild's education. How many years will it take her to reach her goal of 30,000 if she invests 1,000 per year, earning...
If they pay $100 into an account at the beginning of each of the next 40 years (the account pays 12%), how much will be in the account at the end of year forty (nearest $1,000) ?
Parents deposit $7,000 into a savings account at the end of each year for 22 years to help their child pay for college. The savings account pays 7% interest per year, compounded monthly. The child...
Suppose you deposit $2000 into an account at the end of each of the next 10 years. If the account earns 12%, how much will be in the account at the end of 30 years?
Suppose you earn $10,000 from a work related accident, and you decide to invest the $10,000. An investor give you the option to earn 4.5% on your investment. The future value of your investment at...
A $4,600 balance in a tax-deferred savings plan will grow to $16, 576.10 in 22 years at an 8% per year interest rate. What would be the future worth if the $4, 600 had been subject to a 27% income...
Your boss as asked you to consider two possible scenarios presented to him by his Pension Advisor for consideration: a. What is the present value of his perpetuity of $100 per year if his approp...
Would a dollar tomorrow be worth more to you today when the interest rate is 20% or when it is 10%?
Isaac only has $1,090 today but needs $1,979 to buy a new computer. How long will he have to wait to buy the computer if he eams 5.4 percent compounded annually on his savings? Assume the price of...
Suppose a country has an economic growth rate of 1.8% compounded continuously. Exactly how many years will it take for the level of economic output to double? a) 28.9 b) 0.38 c) 38.5 d) 39
Uriah Heap celebrated his 18th birthday by opening a savings account at the Thames River Bank and depositing $2,500. He continued to deposit the same amount on every subsequent birthday until he wa...
Suppose If $100 invested at time 0 accumulates to $152 at time 4 and $ 200 invested at time 0 accumulates to $ 240 at time 2, find the accumulated value at time 8 of $ 1,600 invested at time 6.
Assume Sheryl Jenkins wants to accumulate $12,252.10 in two years. She currently has $10,787.87 to invest. What interest rate must she earn on her investment (that is if she deposits $10,787.87 tod...
Suppose you learned that an account you had forgotten about currently has a balance of $24,000 and has been growing at an average rate of 8.5% per year for the past 20 years (exactly). What was the...
Clarence Weatherspoon, a super salesman contemplating retirement on his fifty-fifth birthday, decides to create a fund on an 9% basis that will enable him to withdraw $30,500 per year on June 30, b...
Suppose you will deposit $200000 in a bank account and increase the annual deposit by 3% each year for another 29 years. How much will you be able to withdraw in 30 years if the discount rate is 10...
Jackie Rich would like to buy a $19,000 Toyota hybrid car in 4 years. Jackie wants to put the money aside now. Jackie's bank offers 8% interest compounded semiannually. How much must Jackie invest...
Jackie Rich would like to buy a $22,000 Toyota hybrid car in 5 years. Jackie wants to put the money aside now. Jackie's bank offers 6% interest compounded semiannually. How much must Jackie invest...
What are some examples of Time of Value of Money (TMV)? How can cash flow be increased with TVM?
Bruce and Robbie each open up new bank accounts at time 0. Bruce deposits 100 into his bank account, and Robbie deposits 50 into his. Each account earns an annual effective discount rate of d. The...
Suppose you deposit $300 today into a bank account with a variable interest rate and will receive a payment in one year. True or False: If during the year the interest rate falls, this increases th...
1) What is the present value of $815,400 deposited in 23 years if the rates of interest are 6 percent for the first six years, 7 percent for the next 6 and 8 percent for the remaining period? a) 1...
Use the basic formula for future value along with the given interest rate, r, and the number of periods, n, to calculate the future value of $1 in the case shown below. 14% interest rate and 9 peri...
Inga was injured and can no longer work. As a result of a lawsuit, she is to be awarded the present value of the income she would have received over the next 15 years. Her income at the time she wa...
A movie stuntman receives annual salary of 110,000, but becomes a quadriplegic after jumping from a diff into water that is too shallow. He can never work again as a stuntman. Through a legal settl...
What is the present value of $30,000 to be received in two years, at 12% compounded annually, is (rounded to nearest dollar)? a. $23,700 b. $30,000 c. $23,916 d. $37,632
You are interested in saving money for your first house. Your plan is to make regular deposits into an account that will earn 12.20% per year. Your first deposit of $4,500 will be made today. You a...
You are interested in saving money for your first house. Your plan is to make regular deposits into a brokerage account which will earn 10%. Your first deposit of $5,000 will be made today. You als...
Approximately how many years are needed to double a $100 investment when interest rates are 7.50 percent per year?
Why is the Time Value of Money (TVM) an essential concept for business decision making? Cite some examples of the types of decisions where TVM concepts are used.
Why does money have a time value? Provide at least one real-life scenario in which you can apply the concept of time value of money.
Why does money have a time value? Can you provide at least one real life scenario in which you can apply the concept of time value of money?
Tortuga Enterprises loaned $350,000 to Turner Inc. on January 1, 2010. The terms of the loan require principal payments of $70,000 each year for five years plus interest at the market rate of inter...
A widower currently has $107,500 yielding 8 percent annually. Can he withdraw $18,234 a year for the next 10 years? If he cannot, what return must he earn in order to withdraw $18,234 annually?
A couple is saving for their child's college tuition. On January 1, the open an account and plan to invest $250 at the end of each month while earning 9% per year in the account. How much will the...
Suppose you were to invest $5,000 today at a guaranteed rate of return of 4% per year (so, the return is 5% compounded annually). What will this investment be worth in 10 years?
The apartment that a landlord purchased has appreciated by 3.5% per year over the last 30 years. Assuming this will continue, what will the future value of the $210,000 apartment be in 10 years?
In 1958, a first-class postage stamp for a 1-ounce envelope was $0.04. Today, a first-class postage stamp for the same envelope is $0.45. What was the annual compound increase in the cost of the fi...
If you can earn 5.25% per year on your investments, how long will it take to double your money? a. 6.31 years b. 19.05 years c. 13.55 years d. There is not enough information to answer this question.
The principal is 50,000, the time is 3 years, and the rate is 4%. Find the future amount given F = P(1 + rn), where P is the principal amount, r is the rate, and n is the number of years.
You have the chance to receive $700 at the end of 2 years. a) If you can earn 5% on similar risk investments, what is the most you should be willing to pay today for this investment (i.e., today's...
Doug has developed a financial retirement strategy. His plan is to invest in somewhat risky stocks for 15 years and then move everything to low risk bonds for the retirement years as described belo...
Find the compound amount for the deposit. Round to the nearest cent. $19,00 at 3% compounded quarterly for 6 years. A) $2,268.70 B) $2,273.19 C) $2,242.00 D) $1,987.12
Answer the following questions: 1) At an interest rate of 4%, what comes closest to the amount of time it takes for a deposit of $7,500 to reach $15,000? a) 17.67 years b) 10.24 years c) 11.90...
Suppose a $2,000 college loan compounds continuously at 5%. Assuming you delay repayment, how many years until your debt grows to $2,500?
On December 30, you decide to make a $1,500 charitable donation. If you are in the 28 percent tax bracket, how much will you save in taxes for the current year? If you deposit that tax savings in a...
You are given a choice from an insurance settlement; 30,723 dollars today in a single payment, or 5,000 dollars per year paid at the end of each year for the next 10 years. If your discount rate is...
A small business borrows $10,000 from a bank at a 7.5% effective annual interest rate with an agreement that the loan would be repaid when the loan balance reaches $16,600. If no interim payments a...
Find the future value of a five-year $100,000 investment that pays an interest rate of 8.25% compounded monthly.
Find the future value of a five-year $100,000 investment that pays an interest rate of 8.25% compounded annually.
You have just made your first $3,000 contribution to your individual retirement account. Assuming you earn a 9 percent rate of return and make no additional contributions, what will your account be...
You have just made your first $1,500 contribution to your retirement account. Assuming you earn an 9 percent rate of return and make no additional contributions. Required: (a) What will your accoun...
Using the information below and an interest rate of i = 8%. FC AOC Rev Sal Life Option A: $20,000 $2,000 $8,500 5,000 8 yrs. Option B: $10,000 $2,800 $6,500 2,000 4 Yrs. 1) The Annual Worth for bo...
a. Ken invested $6,000 in a savings account that pays interest at the rate of 1% per quarter. At the end of five years, Ken withdraws only the interest. How much does he withdraw? b. How long will...
For the period from time 0 to time 2, the force of interest is defined as follows: 10, 000 is invested at time 0. Find the accumulated value at time 1 and at time 2.
One way to visualize cash flows, interest rates, and time that is very helpful is to put this information on a: | | | timeline. | | | space ship. | | | discount double check. | | | longitudinal st...
The subarea of finance where you need to value uncertain cash flows occurring at different points in time is: A. Investments B. Corporate finance C. Capital Market D. Bank Management E. all of...
David Siderski bought a $7,500 bank certificate paying 16% compounded semi-annually. How much money did he get upon cashing in his certificate 3 years later?
An individual has $1,000 to invest. He wants to accumulate $3,670 and can earn 8% annual interest on investments, compounded annually. How many years will it take to attain his goal?
The value of a stock increases by 2% every year. At the beginning of February 1st, 2014 it is valued at 85 dollars per share. (a) Write a formula for the value of the stock (in dollars) as a funct...
Present Value=7,500, Interest Rate=8%, Future Value=16,192. What is the amount of years?
Provide examples of PV and FV, TVM
This morning, TL Trucking invested $80,000 to help fund a company expansion project planned for 4 years from now. How much additional money will the firm have 4 years from now if it can earn 6 perc...
Your MARR is 10% per year. It is currently Year 0. You have been offered a job. Your starting salary, paid in Year 1, will be $100,000, and your salary will go up by 2% every year. You expect to re...
Eugene began to save for his retirement at age 32, and for 12 years he put $ 200 per month into an ordinary annuity at an annual interest rate of 7% compounded monthly. After 12 years, Eugene was u...
All of the following factors must be known in order to calculate the future value of a single sum except: a. the interest rate to be earned b. the present value of the sum c. the amount to be depos...
In 2 years from today, Judy plans to invest $12,000 in an investment that has a return of 7.5 percent per year. How much will Judy's investment be worth in 9 years from today?
FASM Bank has designed a security that will pay a dividend of $10.00 in perpetuity. The dividend will be paid monthly and the initial dividend will be paid one month from today. What is the price o...
A contractor estimates that maintenance on a new piece of equipment will be $275 for the first month and it will increase by 0.5% each month afterwards. However, the contractor is offered a service...
On January 1, 2OX1, an individual deposited $3,000 in a special fund that will be compounded monthly. What will the balance in the fund be on December 31, 20X3, assuming the fund can earn an annual...
The Fix-it Shop has zero coupon bonds outstanding that mature in three years. The bonds have a face value of $ 1,000 and a current market price of $ 860. What is the company's pre-tax cost of debt?
If $1,800 is invested for x years at 8%, compounded quarterly, the future value that will result is represented by the following equation. S = 1800{\left( {1.02} \right)^{4x}} What amount will resu...
Janeel owns an oil pipeline that will generate a $3.8 million cash return over the coming year. The pipeline's operating costs are negligible, and it is expected to last for a very long time. Unfor...
What is the minimum rate of interest that will double a single cash flow investment in 19 compounding periods?
Don may not be the brightest candle on the cake. He has more taxes withheld from his paycheck so he will get a large check come April from the Federal government. Well, this check came in the mail...
Andres Michael bought a new boat. He took out a loan for $24,240 at 2.5% interest for 4 years. He made a $4,690 partial payment at 4 months and another partial payment of $3,440 at 8 months. How mu...
What is the value in year 12 of a $2,900 cash flow made in year 3 if interest rates are 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
On January 1, Year 1, Cumulator Co. made the first of a series of equal annual payments to be made at the beginning of each year through Year 6. Cumulator's intention is to establish a fund with a...
WhiteEd Inc.'s stock currently sells for $100 per share. The dividend is projected to increase at a constant rate of 2.5% per year. The required rate of return on the stock, R, is 4.5%. What is...
Cooling Tools, Inc. is currently producing 943 small refrigerators per month, but the company's CEO plans to increase production at a rate of 7.85 percent per month until the firm is producing 6,32...
Two flash vaporizer machines are considered for the upgrade of biodiesel production. Information about the two machines is given below. MARR is 10% per year. Machine A Machine B Capital Investme...
a. Define future value. b. Write its equation.
You have just made your first $8360 contribution to your retirement account. Assume you earn an 9.2 percent rate of return and make no additional contributions. What will your account be worth whe...
The following table shows a series of payments. What future sum is equivalent to the series of payments at a 10% interest rate? A. $7660 B. $7212 C. $6666 D. $5995
What's the future worth of the following series of payments? a) $8,000/year for 5 yrs at 11.75% compounded annually b) $7,000/year for 20 yrs at 6.45% compounded annually
What will be the balance at the end of 5 years for $30,500 now at 10% annual interest, if compound interest is: a. Monthly b. Continuously
What is the NFW for Alt. B? a. $1,912.80 b. -$436 c. $708 d. $1,434.10
What is the NFW for Alt. A? a. $1,912.80 b. -$436 c. $708 d. $1,434.10
After your graduation, you get offers from companies in VA and TX at the same time. Both offers will a salary of $50,000 per year. However, VA tax is 12% and TX tax is 8.6%. If you accept the offer...
You are starting college this month, and your favorite aunt has agreed to give you $4,000 at the end of each of your four years and you can save $8,000 at the end of each year for the first two yea...
Future value $5,100 invested for 9 years at 10%t compounded annually will accumulate to $____. Round to nearest cent.
John executive VP contemplating retirement on his sixty-fifth birthday decides to create a fund on a 6% basis that will enable him to withdraw $90,000 per year on July 31, beginning in 2022 and con...
Mr. Sharkley is selling his boat for $6870. Mr. Kay has offered to buy the boat and pay for it in 18 months. He is willing to pay the going rate of interest of 4%. What payment will Mr. Kay make to...
An electric switch manufacturing company has to choose one of the three different assembly methods. Method A will have a first cost of $40,000, an annual operating cost of 9,000 and a service life...
Joe Doe deposited $ 51,000 in your savings account. The interest rate is 10% compounded semiannually. How old will take to reach $ 72.600.00 investment? You have deposited $ 10,000 in equity inve...
Suppose you are 20 years old trying to decide which career path to take based on the future expected streams of income. Occupation A has you earning $15,000 for 5 years and then $25,000 for then ne...
Currently, a season package costs $750 per seat. The season ticket holders have been promised the same rate for the next five years. Six years from now the organization will raise season ticket pri...
Your firm has been told that it needs $100,000 today to fund a $150,000 expansion project 4 years from now. What rate of interest was used in the present value computation? a. 9.19 percent b. 8.5...
Abc Corp. invests $15,000 at an interest rate of 12%. What will be the future value of this investment five years from now? Assume the interest rate compounds annually.
Two competing endorsements: Offer A: single payment of $1 million upfront Offer B: $500,000 per year at the end of the next three years Estimated cost of capital is 10% Which offer do you take...
You have $480 in an account which pays 4.3% compounded annually. If you invest your money for 10 years, then how many dollars of interest will you earn by the end of the term? (Round your answer to...
Since 2007, a particular fund returned 13.1% compounded monthly. How much would a $5,000 investment in this fund have been worth after 2 years? (Round your answer to the nearest cent)
Since 2007, a particular fund returned 13.2% compounded monthly. How much would a $6,000 investment in this fund have been worth after 3 years? (Round your answer to the nearest cent.)
Suppose you receive a $1,000 gift today. If the interest rate is 6% per year, the future value of the gift one year from today will be. Again, suppose you receive a $1,000 gift today. If the intere...
The rule of 72 is a handy rule for estimating how long it takes money to double with annual compounding. If r is the annual interest rate (expressed as a decimal then the doubling time is approxima...
ICS Manufacturing Company produces plastic parts for the automotive industry. Here is their Income Statement for 2015 ICS Manufacturing Company Income Statement for 2015 Sales Revenue $35,500,000...
The income tax-free yield on a certain municipal bond is 7% per year. This translates into approximately 5% annual yield if the municipal bond's interest had been taxable in the 28% income tax brac...
Would one dollar tomorrow be worth more to you today when the interest rate is 20% or when it is 10%?
On December 31, 2014, Natalie Livingston signs a contract to make annual deposits of $4,200 in an investment account that earns 10%. The first deposit is made on December 31, 2014. 1. Calculate wha...
You can earn 0.45% per month at your bank. If you deposit $1,500, how long must you wait until your account has grown to $3,600?
You can earn .45 percent per month at your bank. If you deposit $2,800, how long must you wait until your account has grown to $4,500?
Find future worth (equivalent value in period 100) of the following project, if the project's interest rate is 10% per period. Periods Cash flows 0 -$20,000 1-50 $150 51 $100 52 $205 53-100 $150
You have just won a jackpot of $15,000,000 in the lottery and must choose between a lump sum payment today of $10,000,000 or equal installments of $750,000 per year with the first installment comin...
How long does it take a present value amount to triple if the expected return is 11.1%?
During a prolonged recession, property values on Long Island depreciated by 3% every 6 months. If my house cost $200,000 originally, how much was it worth 13 years later?
Henry Jones is planning to retire in 15 years. He wishes to deposit an equal amount (A) every 6 months until he retires so that, beginning one year following his retirement, he will receive annual...
Baby Joe's grandparents decided to start depositing $2,000 per year on his 4th birthday and plan to continue doing so until his 18th birthday. How much money will be in the account on his 18th birt...
1) Suppose you make 15 equal annual deposits of $1,000 each into a bank account paying 12% interest per year. The first deposit will be made one year from today. How much money can be withdrawn fro...
James plans to fund his individual retirement account, beginning today, with 20 annual deposits of $2,000, which he will continue for the next 20 years. If he can earn an annual compound rate of 8...
Suppose Jennifer deposits $500 in an account at the end of this year, $400 at the end of the next year, and $300 at the end of the following year. If her opportunity cost is 7.5%, how much will be...
You are chairperson of the investment fund for the Continental Soccer League. You are asked to set
You invest $800 at an annual rate of 8% for twelve years. (a) How much more interest would you earn in year 7 with compound vs. simple interest? (b) How much more for the whole 12 years?
You have 1,150,000 in cash. How long would it take them to accumulate $2,000,000 in cash? Assume an interest rate of 5
MHS currently has $1,150,000 in cash. How long would it take them to accumulate $2,000,000 in cash? Assume an interest rate of 5%.
Ben Collins plans to buy a house for $302,000. If that real estate is expected to increase in value 4 percent each year, what would its approximate value be seven years from now?
Ben Collins plans to buy a house for $150,000. If the real estate in his area is expected to increase in value by 1 percent each year, what will its approximate value be five years from now?
Allan borrowed $5,800 from his father to buy a car. He repaid him after 6 months with interest of 4%. Find the total amount he repaid. a) $5,896.67 b) $5,916.00 c) $116.00 d) $6,032.00
Suppose that you are obtaining a personal loan from your uncle in the amount of S30,000 (now) to be repaid in three years to cover some of your col- lege expenses. If your uncle usually earns 9% in...
Johnson & Johnson one of the world's largest manufacturers of health care products. The company's December 31, 2013, financial statements included the following information in the long-term debt di...
Do you think the time value of money would also be useful if companies are evaluating various options for capital investments (i.e. projects, fixed assets, etc.)? Why or why not?
Suppose a bank promises an annual return of 6.5 percent on a three month (90 day) $150,000 CD. What will be the total amount due the customer at the end of the three month period? Show all work.
Eugene began to save for his retirement at age 35, and for 10 years he put $200 per month into an ordinary annuity at an annual interest rate of 6% compounded monthly. After 10 years, Eugene was un...
1. Jose now has $2,000. How much would he have after 4 years if he leaves it invested at 5% with annual compounding? 2. You hope to buy your dream car four years from now. Today, that car costs $8...
The great, great grandparents of one of your classmates sold their factory to the government 104 years ago for $150,000. If these proceeds had been invested at 6%, how much would this legacy be wor...
Assume Bill Jones invested $2,696.01 into an account exactly one year ago. The account has an interest rate of 6.0% p.a. How much does Bill have in his account today (that is, exactly one year afte...
Assume Bill Jones invested $4,604.93 into an account exactly one year ago. The account has an interest rate of 7.4% p.a. How much does Bill have in his account today (that is, exactly one year afte...
Ross has decided that he wants to build enough retirement wealth that, if invested at 8 percent per year, it will provide him with $4,550 of monthly income for 31 years. To date, he has saved nothi...
a. Assume Bill Jones invested $ 4,065.85 into an account exactly one year ago. The account has an interest rate of 7.1 % p.a. How much does Bill have in his account today (that is, exactly one year...
A contractor is considering the following three alternatives: a. Purchase a new tractor for $15,000. The system is expected to last 6 yr with a salvage value of $1,000. b. Lease a new tractor for...
Suppose that you have a money market certificate earning an annual rate of interest, which varies over time as follows:
Jeff invests $2,400 for n years in a savings account, that pays a 7.5% annual compound interest. At the end of n years, he has $3,445.51 in the savings account. What is the value of n? Show all work.
Assume you are to receive a 10-year annuity with annual payments of $218. The first payment will be received today (that is, at t = 0) and the last payment will be received at the end of Year 9 (th...
Joan dies in 2017 leaving an estate of $ 1 m. She inherited $50,000 from her father in 1980. From 1980 to 2017 the average nominal return on capital was 8%. (a) What fraction of her wealth at deat...
Using a present value table, calculate the present value for the following: (Use appropriate factor(s) from the standard tables.) Required: a. A car down payment of $30,000 that will be required...
Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like...
Cousin Brucie has a classic car (1963 Corvette) that is currently worth $60,000. Brucie expects the car to increase in value by 8% annually. How much should this car be worth after 15 years? A. $6...
Two years ago, you opened an investment account and deposited $18,000. One year ago, you added another $3,300 to the account. Today, you are making a final deposit of $14,000. How much will you hav...
Create an account to browse all assets today
Support