Solve various time value of money scenarios:

1. Jeff just hit the jackpot in Las Vegas and won $25,000! If he invests it now at a 12% interest rate, how much will it be worth in 20 years?

2. Evan would like to have $2,000,000 saved by the time he retires in 40 years. How much does he need to invest now at a 10% interest rate to find his retirement goal?

3. Assume that Stephanie accumulates savings of $1 million by the time she retires. If she invests this savings at 8%, how much money will she be able to withdraw at the end of each year for 20 years?

4. Katelyn plans to invest $2,000 at the end of each year for the next seven years. Assuming a 14% interest rate, what will her investment be worth seven years from now?

5. Assuming a 6% interest rate, how much would Danielle have to invest now to be able to withdraw $10,000 at the end of each year for the next nine years?

6. Jim is considering a capital investment that costs $485,000 and will provide the following net cash inflows: 

1st year.................$300,000 

2nd year................$200,000 

3rd year.................$100,000 

Using a hurdle rate of 12%, find the NPV of the investment.

7. What is the IRR of the capital investment described in question 6.

 

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Scenario 1. Jeff just hit the jackpot in Las Vegas and won $30,000! If he invests it now at a 12% interest rate, how much will it be worth in 20 years? (Round your answer to the nearest whole dollar.) Future value = $ Scenario 2. Evan would like to have $3,000,000 saved by the time he retires in 30 years. How much does he need to invest now at a 14% interest rate to fund his retirement goal? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 3. Assume that Tina accumulates savings of $1 million by the time she retires. If she invests this savings at 8%, how much money will she be able to withdraw at the end of each year for 20 years? (Round your answer to the nearest whole dollar and enter as a positive amount.) Amount able to withdraw = $ Scenario 4. Cathy plans to invest $2,500 at the end of each year for the next eight years. Assuming a 14% interest rate, what will her investment be worth eight years from now? (Round your answer to the nearest whole dollar.) Future value = $ Scenario 5. Assuming a 12% interest rate, how much would Katie have to invest now to be able to withdraw $9,000 at the end of every year for the next nine years? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 6. Chuckie is considering a capital investment that costs $535,000 and will provide net cash inflows for three years. Using a hurdle rate of 8%, find the NPV of the investment. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign to represent a negative NPV. Net Present Value (NPV) = $ Scenario 7. What is the IRR of the capital investment described in Question 6? The IRR is the interest rate at which the investment NPV = 0. We tried 8% in question 6, now we'll try 10% and calculate the NPV. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign to represent a negative NPV.) Net Present Value (NPV) = $ The IRR for the project is Scenario 1. Jeff just hit the jackpot in Las Vegas and won $30,000! If he invests it now at a 12% interest rate, how much will it be worth in 20 years? (Round your answer to the nearest whole dollar.) Future value = $ Scenario 2. Evan would like to have $3,000,000 saved by the time he retires in 30 years. How much does he need to invest now at a 14% interest rate to fund his retirement goal? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 3. Assume that Tina accumulates savings of $1 million by the time she retires. If she invests this savings at 8%, how much money will she be able to withdraw at the end of each year for 20 years? (Round your answer to the nearest whole dollar and enter as a positive amount.) Amount able to withdraw = $ Scenario 4. Cathy plans to invest $2,500 at the end of each year for the next eight years. Assuming a 14% interest rate, what will her investment be worth eight years from now? (Round your answer to the nearest whole dollar.) Future value = $ Scenario 5. Assuming a 12% interest rate, how much would Katie have to invest now to be able to withdraw $9,000 at the end of every year for the next nine years? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 6. Chuckie is considering a capital investment that costs $535,000 and will provide net cash inflows for three years. Using a hurdle rate of 8%, find the NPV of the investment. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign to represent a negative NPV. Net Present Value (NPV) = $ Scenario 7. What is the IRR of the capital investment described in Question 6? The IRR is the interest rate at which the investment NPV = 0. We tried 8% in question 6, now we'll try 10% and calculate the NPV. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign to represent a negative NPV.) Net Present Value (NPV) = $ The IRR for the project is

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