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Time Value of Money Concept
The following situations involve the application of the time value of money concept:
1. Janelle Carter deposited $9,750 in the bank on January 1, 1995, at an interest rate of 12% compounded annually. How much has accumulated in the account by January 1, 2012?
2. Mike Smith deposited $21,600 in the bank on January 1, 2002. On January 2, 2012, this deposit has accumulated to $42,486. Interest is compounded annually on the account. What rate of interest did Mike earn on the deposit?
3. Lee Spony made a deposit in the bank on January 1, 2005. The bank pays interest at the rate of 8% compounded annually. On January 1, 2012, the deposit has accumulated to $15,000.
How much money did Lee originally deposit on January1, 2005?
4. Nancy Holmes deposited $5,800 in the bank on January 1 a few years ago. The bank pays an interest rate of 10% compounded annually, and the deposit is now worth $15,026. How
many years has the deposit been invested?

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