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Time Value of Money

This document contains 15 problems related to the time value of money concept. Specifically, it addresses compound interest calculations, future and present value of a single payment, future and present value of an annuity, and internal rate of return. The problems provide financial scenarios and ask the reader to calculate unknown values like future amounts, interest rates, payment amounts, number of periods, and present values using time value of money formulas.

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Kathleen
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209 views1 page

Time Value of Money

This document contains 15 problems related to the time value of money concept. Specifically, it addresses compound interest calculations, future and present value of a single payment, future and present value of an annuity, and internal rate of return. The problems provide financial scenarios and ask the reader to calculate unknown values like future amounts, interest rates, payment amounts, number of periods, and present values using time value of money formulas.

Uploaded by

Kathleen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Time Value of Money

1. If you wish to accumulate $140,000 in 13 years, how much must you deposit today in an account that pays an
annual interest rate of 14%?

2. What will $247,000 grow to be in 9 years if it is invested today in an account with an annual interest rate of
11%?

3. How many years will it take for $136,000 to grow to be $468,000 if it is invested in an account with an
annual interest rate of 8%?

4. At what annual interest rate must $137,000 be invested so that it will grow to be $475,000 in 14 years?

5. If you wish to accumulate $197,000 in 5 years, how much must you deposit today in an account that pays a
quoted annual interest rate of 13% with semi-annual compounding of interest?

6. What will $153,000 grow to be in 13 years if it is invested today in an account with a quoted annual interest
rate of 10% with monthly compounding of interest?

7. How many years will it take for $197,000 to grow to be $554,000 if it is invested in an account with a quoted
annual interest rate of 8% with monthly compounding of interest?

8. At what quoted annual interest rate must $134,000 be invested so that it will grow to be $459,000 in 15 years
if interest is compounded weekly?

9. You are offered an investment with a quoted annual interest rate of 13% with quarterly compounding of
interest. What is your effective annual interest rate?

10. You are offered an annuity that will pay $24,000 per year for 11 years (the first payment will occur one year
from today). If you feel that the appropriate discount rate is 13%, what is the annuity worth to you today?

11. If you deposit $16,000 per year for 12 years (each deposit is made at the end of each year) in an account that
pays an annual interest rate of 14%, what will your account be worth at the end of 12 years?

12. You plan to borrow $389,000 now and repay it in 25 equal annual installments (payments will be made at
the end of each year). If the annual interest rate is 14%, how much will your annual payments be?

13. You are told that if you invest $11,000 per year for 23 years (all payments made at the end of each year) you
will have accumulated $366,000 at the end of the period. What annual rate of return is the investment offering?

14. You are offered an annuity that will pay $17,000 per year for 7 years (the first payment will be made today).
If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today?

15. If you deposit $15,000 per year for 9 years (each deposit is made at the beginning of each year) in an
account that pays an annual interest rate of 8%, what will your account be worth at the end of 9 years?

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