Problem Assignment: Time Value of Money

1. If you deposit $15,000 today and earn 8% annual interest, how much will you have in 9 years?

2. Tiffany will receive a graduation gift of $10,000 from her parents in 3 years. If the discount rate

3. What is the present value of a 20-year ordinary annuity of $30,000 using a 6% discount rate?

4. You deposit $5,000 in an account that pays 8% interest per annum. How long will it take to double your money?

5. The Johnsons have $60,000 to use as a down-payment on a house, and they want to borrow $240,000 from the bank. The current mortgage interest rate is 5%. If they make equal monthly payments for 30 years, how much will the monthly payment be?

6. Tim paid $250 per month into his 401K retirement plan. After 30 years, he had accumulated $500,000. What average annual rate of interest had he earned over the 30 years?

7. Charlotte’s firm had sales of $525,000 in the year 2001. By 2012, sales had increased to $1,200,000. What was the average annual rate of increase?

8. Alan had saved up $252,000. How much more must he save each year over the next 20 years in order to have a total of $1 million? Alan earns 5% interest, compounded annually.