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Business Case

By | Feb. 2013
Page 1 of 23
Time Value of Money (TVM) Assignments:

6. Calculating Interest Rates In 2003, the automobile industry announced the average vehicle selling price in the United States was $28,835. Five years earlier, the average price was $21,608. What was the annual increase in vehicle selling price?

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|Enter |5 | |$21,608 | |($28,835 | | | |N | | |I/Y |

7. Calculating the Number of Periods You’re trying to save to buy a new $150,000 Ferrari. You have $40,000 today that can be invested at your bank. The bank pays 5.5 percent annual interest on its accounts. How long will it be before you have enough to buy the car? ***

|Enter | |5.5% |$40,000 | |($150,000 | | | |N | | |I/Y |

8. Calculating Present Values You have just received notification that you have won the $1 million first prize at the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 80 years from now. What is the present value of your windfall if the appropriate discount rate is 10 percent?

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|Enter |80 |10% | | |$1,000,000 | | | |N | | |I/Y |

9.Calculating Interest Rates and Future Values In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2003, the winner’s check was $1,080,000. What was the percentage increase in the winner’s check over this period? If the winner’s prize increases at the same rate,...

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