TVM has many applications,such as: calculating your mortgage and car payments, figuring out how much youhave to
Question:
TVM has many applications,such as: calculating your mortgage and car payments, figuring out how much youhave to save up for retirement planning, how a firm decides to invest inproject A vs B, how to answer the main question when you win the lottery, etc.,etc.
So try these all…don’twait till Sunday to try them; I’ll try and check each day to give you quickfeedback to help you on the homework.
1 . You and your friend both want to save up to buy a $1000computer, 3 years from now. You have a track record of earning 10% on yourinvestments, your friend has a track record of earning 5% on her investments.WHO has to start out withthe bigger amount of money, today? WHY?
2 . What's the FUTURE value or FV of putting $1 in a savings accounttoday, and leaving it there for 2 years if the bank is paying 10%? Is it onlypaying 5%?
3 . What is the PRESENT value or PV of receiving $1.21 two years fromnow, if you have a track record of earning 10% on your money
Expert Answer:
ANSWERS 1 Your friend has to start with the bigger amount of money today because in order to have 10... View the full answer
