7 PRESENT VALUE AND DISCOUNT FUNCTIONS 53 Practice Problems Problem 7.1 At an effective rate of interest of 8% per annum, the present value of $100,000 due in X years is $65,322. Determine X Problem 7.2 What deposit made today will provide for a payment of $1,000 in 1 year and $2,000 in 3 years, if the effective rate of interest is 7.5%? Problem 7.3 The total amount of a loan to which interest has been added is $20,000. The term of the loan was four and one-half years. (a) If money accumulated at simple interest at a rate of 6%, what was the amount of the loan? (b) If the annual rate of interest was 6% and interest was compounded annually, what was the amount of the loan? Problem 7.4 It is known that an investment of $600 will increase to $4,000 at the end of 30 years. Find the sum of the present values of three payments of $10,000 each which will occur at the end of 20, 40, and 60 years