Time Value of Money

• Find the future value of $400 if invested for two years at 14% with semi annual compounding. 
• Find the present value of $500 discounted for five years at 12% with quarterly compounding.
• Find the present value of $2,000 due in two years at a discount rate of 10%.
• Find the future value of $3,000 due in one year compounded at 14%.
• Find the present value of an annuity due, $2,000 a year for five years at 10%.
• Find the present value of an ordinary annuity, $1,000 a year for ten years at 12%.
• Find the future value of an annuity due, $5,000 a year for 10 years at 12%.
• Find the future value of an ordinary annuity, $3,000 a year for five years at 8%.
• The Dickenson Company buys a machine for $500,000 and expects a return of $119,260.50 per year for the next 10 years.  What is the expected rate of return on the machine?
• Great Atlantic Mortgage offers to lend you $150,000; the loan calls for annual payments of $16,432.08 for twenty years.  What interest rate is the company charging you?
• Your broker offers to sell you a note for $3,992.70 that will pay $1,000 per year for five years.  If you buy the note, what rate of interest will you be earning?
• You are buying a new car.  You will borrow $8,000 from the bank in order to pay for the car.  The interest rate is 12%.  The loan requires monthly payments for two years.  What will be the monthly payments on the loan?
• Five years ago, a stock was earning 5% return.  This year, it has earned 16%.  What is the growth rate?
• If you invest $100 a year for 25 years, making the payments at the end of the year, and the expected rate of return is 10% annually, how much will you have?
• Now assume that you made the above payments at the beginning of the year instead of at the end of the year.  How much will you have?
• Spartan Financial Corporation offers to lend you $75,000; the loan calls for annual payments of $9,860.51 for 15 years.  What rate of interest is the company charging you?
• If the periodic rate is 3%, and the interest is compounded quarterly, what is the APR?  
• If the APR is 12% with quarterly compounding, what is the EFF or EAR?
• The lottery is $60,000,000 and the state offers to pay you $3,000,000 per year for the next 20 years, or you can take the lump sum today of $29,500,000.  If you choose to take the $3,000,000 per year for 20 years, the state will invest that $29,500,000 today so that it can give you those payments per year for 20 years. What rate will the $29,500,000 be invested at today to insure that the $3 million will be available to pay you every year for the next 20 years?
• Five years ago, I planted a tree that was three feet tall.  Today, the tree is twelve feet.  What was the annual growth rate?