1. You are planning to retire in twenty years. You'll live ten years after retirement. You want to be able to draw out of your savings at the rate of $10,000 per year. How much would you have to pay in equal annual deposits until retirement to meet your objectives? Assume interest remains at 9%. [$1254]
2. You can deposit $4000 per year into an account that pays 12% interest. If you deposit such amounts for 15 years and start drawing money out of the account in equal annual installments, how much could you draw out each year for 20 years? [$19964.12]
3. What is the value of a $100 perpetuity if interest is 7%? [$1428.57]
4. You deposit $13,000 at the beginning of every year for 10 years. If interest is being paid at 8%, how much will you have in 10 years? [$203391.33]
5. You are getting payments of $8000 at the beginning of every year and they are to last another five years. At 6%, what is the value of this annuity? [35720.84]
6. How much would you have to deposit today to have $10,000 in five years at 6% interest compounded semiannually? [$7440.94]
7. Construct an amortization schedule for a 3-year loan of $20,000 if interest is 9%.
8. If you get payments of $15,000 per year for the next ten years and interest is 4%, how much would that stream of income be worth in present value terms? [$121663.50]
9. Your company must deposit equal annual beginning of year payments into a sinking fund for an obligation of $800,000 which matures in 15 years. Assuming you can earn 4% interest on the sinking fund, how much must the payments be? [$38415]
10. If you deposit $45,000 into an account earning 4% interest compounded quarterly, how much would you have in 5 years? [$54908.55]
11. How much would you pay for an investment which will be worth $16,000 in three years? Assume interest is 5%. [$13821]
12. You have $100,000 to invest at 4% interest. If you wish to withdraw equal annual payments for 4 years, how much could you withdraw each year and leave $0 in the investment account? [$27548]
13. You are considering the purchase of two different insurance annuities. Annuity A will pay you $16,000 at the beginning of each year for 8 years. Annuity B will pay you $12,000 at the end of each year for 12 years. Assuming your money is worth 7%, and each costs you $75,000 today, which would you prefer? [$102228 and $95312]
14. If your company borrows $300,000 at 8% interest and agrees to repay the loan in 10 equal semiannual payments to include principal plus interest, how much would those payments be? [$36897]
15. You deposit $17,000 each year for 10 years at 7%. Then you earn 9% after that. If you leave the money invested for another 5 years how much will you have in the 15th year? [$361374] Time Value of Money Extra Problem Set 2
1. $7,000 dollars 10 years from now at 7% is worth how much today? 2. $10,000 dollars 7 years from now at 10% is worth how much today? 3. How much would you have to put in the bank today at 5% to accumulate $1,000 by next year? 4. If you double your money in 5 years, what interest rate did you earn? 5. If you triple your money in 10 years, what interest rate did you earn? 6. If you put $100 in the market at the end of every year for 20 years at 10%, how much would you end up with? What if you put the $100 in at the beginning of every year? 7. If you put $100 in the market today at 10%, how much would you end up with in 20 years? 8. If you borrow $10,000 for a car loan at a 6% simple annual interest rate, what would be your monthly payment on a 5 year loan? 9. If you borrow $150,000 for a house at a 8% simple annual interest rate for 30 years, what is your monthly payment? 10. A simple annual interest rate of 12% compounded monthly has an effective yield of? 11. A simple annual interest rate of 12%...