# Question: Solve these time value of money scenarios Requirements 1 Suppose you invest

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?

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?

## Answer to relevant Questions

Many, if not most, accounting majors start their careers in public accounting. Do you think most of them stay in public accounting? Discuss what you consider to be a typical career track for accounting majors. How has technology changed the work of management accountants? What other business trends are influencing managerial accounting today? How do these other trends impact management accountants’ roles in the organization? Refer to Vargas Products in E12-46B. Compute the IRR of each project and use this information to identify the better investment. In E12-46B. Use the NPV method to determine whether Vargas Products should invest in the ...Refer to the Cherry Valley Data Set and assume the expansion has a residual value of $950,000 at the end of nine years. Consider how Cherry Valley, a popular ski resort, could use capital budgeting to decide whether the ...Locos operates a chain of sandwich shops. The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,450,000. Expected annual net cash inflows are $1,690,000 with zero ...Post your question