Scribd
Upload
10 views2 pages

Time Value of Money Practice

The document outlines various financial scenarios involving savings, investments, and loans. It includes calculations for saving for a car, future investments for college tuition, mortgage payments for a house, and growth of investments over time. Additionally, it addresses the compounded annual growth rate of a company's profits and the annual rate of return on a long-term investment.

Uploaded by

Lê Lan anh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
10 views2 pages

Time Value of Money Practice

The document outlines various financial scenarios involving savings, investments, and loans. It includes calculations for saving for a car, future investments for college tuition, mortgage payments for a house, and growth of investments over time. Additionally, it addresses the compounded annual growth rate of a company's profits and the annual rate of return on a long-term investment.

Uploaded by

Lê Lan anh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

1.

Assume we need to buy a car


and are saving for it. The target is to
buy in 1 year. There is $20,000 in
our bank account as savings. The
bank pays 5.5% interest on our
savings account. Our goal is to add
$1,500 for the next 12 months into
the account. Let’s calculate the
amount we would have at the end
of the year to purchase the car.

2. If you expect to have $55,000 in


your banking account 8 years from
now, with the interest rate at 6.5%,
you can figure out the amount that
would be invested today to achieve
this.

3. Canadian Foods recorded an


operating profit of $3,568 million
and $7,229 million for 2008 and
2012 respectively. What was the
compounded annual rate of growth
of Canadian Foods'operating profits
during the 2008-2012 period?

4. Mathew Jones plans to pay for


his son's college for 4 year starting
9 years from today. He estimates
the annual tuition cost at $55,000
per year, when his son starts
college. The tuition fees are
payable at the beginning of each
year. How much money must Jones
invest every year, starting one year
from today, for the next eight
years? Assume the investment
earns 9 % annually.

5. You are buying your first house


for $220,000, and are paying
$30,000 as a down payment. You
have arranged to finance the
remaining $190,000 30‐year
mortgage with a 7% nominal
interest rate and monthly
payments. What are the equal​
​ ​ ​
monthly payments you must make?

6. 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%?

7. 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?​

You might also like