# 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?

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