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Calculate the following time value of money problems.

a. What is the future value of 24 periodic payments of $4,620 each made at the beginning of each period and compounded at 8%?

b. What would you pay for a $194,000 face value bond that matures in 15 years and pays $19,400 a year in interest if you wanted to earn a yield of 9%.

c. Mike Finley wishes to become a millionaire. His money market fund has a balance of $317,283 and has a guaranteed interest rate of 11%. How many years must Mike leave that balance in the fund in order to get his desired $1,000,000?

d. Andrew Bogut just received a signing bonus of $1,000,000. His plan is to invest this payment in a fund for 8 years (his planned retirement date). If Bogut plans to establish the AB Foundation once the fund grows to $1,850,930, what annually compounded interest rate must he earn to achieve his goal?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91239549

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