Question

Solve these time value of money scenarios.
Requirements
1. Suppose you invest a sum of $5,000 in an account that bears interest at the rate of 10% per year. What will the investment be worth six years from now?
2. How much would you need to invest now to be able to withdraw $9,000 at the end of every year for the next 20 years? Assume a 12% interest rate.
3. Assume that you want to have $145,000 saved seven years from now. If you can invest your funds at an 8% interest rate, how much do you currently need to invest?
4. Your aunt plans to give you $3,000 at the end of every year for the next 10 years. If you invest each of her yearly gifts at a 12% interest rate, how much will they be worth at the end of the 10-year period?
5. Suppose you would like to buy a small cabin in the mountains four years from now. You estimate that the property will cost $51,500 at that time. How much money would you need to invest each year in an account bearing interest at the rate of 6% per year in order to accumulate the $51,500 purchase price?


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  • CreatedApril 30, 2015
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