# Financial management(the time value of money)

Q.1 You invest \$3,000 for three years at 12 percent.

a.  What is the value of your investment after one year? Multiply \$3,000 x 1.12.

b.  What is the value of your investment after two years? Multiply your answer to part a by 1.12.

d.  Combine these steps using the formula FV = PV x (1+i)n to find the future value of \$3,000 in 3 years at 12 percent interest.

Q.2 What is the present value of

a.  \$7,900 in 10 years at 11 percent?

b.  \$16,600 in 5 years at 9 percent?

c.  \$26,000 in 14 years at 6 percent?

Q.3

a.  What is the present value of \$140,000 to be received after 30 years with a 14 percent discount rate?

b.  Would the present value of the funds in part a be enough to buy a \$2,900 concert ticket?

(550 words)

Approximate price: \$22

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