TVM Homework Submit your answers in CANVAS before it is due USE BAII Plus Financial Calculator or the Factor Table found in Canvas Modules to solve the TVM questions. Use the following to answer questions 1 - 4 (round to nearest whole dollar) An amount is invested today and will remain invested for the next five years. Determine the amount the investment will accumulate over the 5-year period based on the different compounding periods. Investment amount today Interest rate Compounding A $15,000 9.0% Annual B $15,000 9.0% Semiannually C $15,000 9.0% Quarterly D $15,000 9.0% Monthly 1. $__________ Determine the accumulated investment amount for investment A for the 5-year period (round to nearest dollar)? 2. $___________ Determine the accumulated investment amount for B for the 5-year period (round to nearest dollar)? 3. $__________ Determine the accumulated investment amount for C for the 5-year period (round to nearest dollar)? 4. $__________Determine the accumulated investment amount for D for the 5-year period (round to nearest dollar)? Which investment yields a higher future value? A, B, C or D?

Chapter TVM Page TVM-2 Use the following to answer questions 5 - 8 (round to nearest whole dollar) The four actors below have just signed a contract to star in a comedy. Each person signs independent contracts with the following terms: Contract amount How contract is paid Actor 1 $1,125,000 Lump sum in 3 years Actor 2 1,200,000 Lump sum in 4 years Actor 3 375,000 Every year for 3 years Actor 4 300,000 Every year for 4 years Assume an annual discount rate of 12% (compounded annually). 5. $_________What is the value of Actor 1's contract today (round to nearest dollar)? 6. $_________ What is the value of Actor 2's contract today (round to nearest dollar)? 7. $_________ What is the value of Actor 3's contract today (round to nearest dollar)? 8. $_________ What is the value of Actor 4's contract today (round to nearest dollar)? 9. $_____________You would like to start saving for retirement. Assuming you are now 22 years old and you want to retire at age 60, you have 38 years to watch your investment grow. You decide to invest $275 at the end of each month for the next 38 years (456 months). This investment will earn 9% per year into the future. Calculate your accumulated investment at the end of 38 years. (Round to nearest whole dollar)

Chapter TVM Page TVM-3 10. $_________You want to buy a $35,000 car today, but you don't have the cash to buy it. The dealership is offering to loan you the money at 6% interest with payments made monthly for the next six years. If you choose to buy the car, what is your monthly car payment (round to nearest dollar)? 11. $_________You want to start saving now so you have cash to buy a $35,000 car in six years. You can earn 6% interest on your monthly payments. How much must you save each month to achieve your $35,000 goal in 6 years (round to nearest dollar)? 12. $_________ You decide to save $400 every month for the next five years so you can start a small business. You are investing the money and can earn 12%. How much will you have saved by the end of the five years (round to nearest dollar)? 13. $_________You won $50,000, after taxes have been taken out, from a scratch-off lottery ticket. You decide to invest the money, so you have a down payment for a home in 3 years. Your expected annual return is 10%; how much will you have for a down payment in 3 years (round to nearest dollar)?

Chapter TVM Page TVM-4 Use the following to answer 14-18 You are planning on investing $1,200 every year for the next 7 years. You can earn 9% on your investment. The following are your options for investing the money. Option Investment amount Frequency 1 $100 Monthly 2 $300 Quarterly 3 $600 Semi-annually 4 $1,200 Annually 14. $_________What is the value of your investment if you select option 1 (round to nearest dollar)? 15. $_________What is the value of your investment if you select option 2 (round to nearest dollar)? 16. $_________What is the value of your investment if you select option 3 (round to nearest dollar)? 17. $_________What is the value of your investment if you select option 4 (round to nearest dollar)? 18. ____ Which of the above is your best investing option? Use the following to answer 19 - 20: You are going to receive a $20,000 scholarship at the end of 3 years for graduate school. 19. $_________ How much must the scholarship fund invest today so it has the money to pay you in 3 years if it can earn 8% compounded semi-annually (round to nearest dollar)? 20. $_________ How much must the scholarship fund invest today so it has the money to pay you in 3 years if it can earn 8% compounded quarterly (round to nearest dollar)?

Chapter TVM Page TVM-5 Use the following to answer questions 21-25 The company reports the following amounts in its year-end income statement: Net sales $700,000 Cost of goods sold $310,000 Advertising expense 100,000 Sales discounts 3,000 Utilities expense 20,000 Salaries expense 200,000 Effective income tax rate 25% Interest expense 2,000 21. $____________Determine gross profit 22. $____________Determine operating expenses 23. $____________Determine Income tax expense 24. ___ ___.___% Calculate the gross profit ratio (round to one decimal place). 25. ___.___% Calculate the profit margin (round to one decimal place).