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.
c. What is the value of your investment after three years? Multiply your answer to part b by 1.12. This gives your final answer.
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?
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