Exam 5: The Time Value of Money

Five years ago John Henry set aside $5,000 in a separate bank account to be used for his favourite hobby - betting on horses at the race track. This account now has a $10,000 balance. What is the approximate compound interest rate John Henry's hobby is earning?

CapiCal Enterprises is transforming some of their fossil fuel based processes to those being driven by wind turbines. Based on extensive meteorological data, the following savings have been projected for the next five years: $850,000, $680,000, $995,000, $778,000 and $900,000. If interest rates are at 7% compounded annually and the company is willing to invest all the savings in the green technology, what would it be willing to pay today for the reengineering?

CapiCal Industries is issuing bonds at 7% interest but would be willing to buy back the debt at any time after the first 12 months. CapiCal Industries is looking to issue

Tuscarora Transportation recently signed a seven-year loan of $350,000 with annual payments at the end of each year on four warehouses and the adjacent paved acreage at a 9% interest rate compounded annually. What is the total interest that will be paid by the end of the seven-year term?