Question

1. Time Value of Money

a. What is the present value of a $2,000 lump sum to be
paid in six years if interest rate is 5%?

b. Suppose you deposit $1,000 today in an account that
pays 8% APR. How many years will it take the account balance to
grow to $3,000 if interest is compounded quarterly?

Answer #1

**1**

**a.**

Given future value FV= $2000

Paid lumpsum

Time t= 6 years

Interest rate r = 5%

Present value = FV/ (1+r)^t

= 2000 / (1+ 0.05)^6 = 1492.430793

Therefore **Present Value = $1492.43**

**b.**

deposit P = 1000

interest rate = 8% per annum

compounded quarterly = interest rate r = 8% /4 = 2%

let time = t years

A = P (1+r/n)^nt

Here quarterly implies n =4

3000 = 1000 * (1+ 0.08/4)^4t

3 = 1.02^4t

Taking logarithm on both sides

log(3) = log (1.02^4t)

4t * log (1.02) = log(3)

4t = log(3)/ log (1.02)

4t = 55.478

t = 55.478/4 = 13.8695

Therefore **it will take approximate of 14 years for the
balance to grow to $3000.**

Time Value of Money
What is the present value of a $2,000 lump sum to be paid in
six years if interest rate is
5%?
Suppose you deposit $1,000 today in an account that pays 8%
APR. How many yearswill it take the account
balance to grow to $3,000 if interest is compounded quarterly?

Time Value of Money
a. What is the present value of a $2,000 lump sum to be paid in
six years if interest rate is 5%?
b. Suppose you deposit $1,000 today in an account that pays 8%
APR. How many years will it take the account balance to grow to
$3,000 if interest is compounded quarterly?

8. At what quoted annual interest rate must $135,000
be invested so that it will grow to be $460,000 in 15 years if
interested is compounded weekly?
9. If you wish to accumulate $500,000 in 20 years,
how much must you deposit today in an account that pays a quarterly
interest rate of 2%?
10. How many months will it take for $200,000 to grow to be
$550,000 if it is invested in an account with a quoted annual
interest rate of...

What lump sum of money must be deposited into a bank account at
the present time so that $600 per month can be withdrawn for six
years, with the first withdrawal scheduled for seven years from
today? The interest rate is 1/2% per month. (Hint: Monthly
withdrawals begin at the end of the month 84.)

Assuming money is worth 8% compute the present value of the
following - be sure to include how you arrived at your
answer
$7,000 received 15 years from today
The right to receive $1,000 at the end of each of the next
six years
The obligation to pay $3,000 at the end of each of the next
10 years

Question No : 3
If you deposit 10 $ in an account, that pays 5% interest,
compounded annually, how much you will have at the end of 10 years?
50 years and 100 years
How much will be in account at the end of 5 years the amount
deposited today is 10,000 and interest is 8% per year, compounded
semiannually?
How much would I have to deposit in an account today that pays
12% interest, compounded quarterly, so that I...

What is the present value of $200 to be received two years from
now, with an interest rate of 5%?
You deposit $2000 today at 6% interest. How much will you have
in 5 years?
You invest $5,000 today. You will earn 8% interest. How much
will you have in 4 years?
You have $450,000 to invest. If you think you can earn 7%, how
much could you accumulate in 10 years?
You deposit $300 each year for 15 years...

What is the present value of a bond that pays $45 per year
periodic coupon payment for the next 10 years and at the end of the
10th year the bond also pays a lump sum $1,000 given the investors
opportunity cost is 6% APR and interest rate is compounded
semi-annually? Please show your formula in your answer and explain
step-by-step calculation to arrive to your final answer.

Q3) How many years would it take an investment of $333 to grow
to $10,789 at an annual rate of return of 11.00%?
Q4) How much money would you need to deposit today at 23.00%
annual interest compounded monthly to have $26,802 in the account
after 13 years?
Q5) If you deposit $729 into an account paying 15.00% annual
interest compounded quarterly, how many years until there is
$37,847 in the account?
Q6) If you deposit $21,114 at 06.00% annual...

A. Suppose you invest $83736 today in an account that earns 13%
interest annually. How much money will be in your account 7 years
from today?
B. What is the value today of single payment of $36665, 18 years
from today if the value is discounted at a rate of 19%?
C. How many years would it take an investment of $172 to grow to
$18096 at an annual rate of return of 15%?
D. How much money would you...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 38 seconds ago

asked 17 minutes ago

asked 18 minutes ago

asked 32 minutes ago

asked 41 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago