Exam 4: Time Value of Money 1: Analyzing Single Cash Flows

What is the value in year 6 of a $9,000 cash flow made in year 14 if interest rates are 7 percent in years 4 through 9 and increase to 10 percent after that?

You want to retire in 25 years and you have just inherited $300,000. You believe you will need $1,450,000 upon retirement. What rate will you need to earn on the account to achieve this goal?

Approximately how many years does it take to double a $475 investment when interest rates are 8 percent per year?

What would be more valuable, receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent?

You have $50,000 in your account. Assuming no additional deposits are made and your account earns 8 percent per year, how long will it take for the account to have a balance of $500,000?

An appliance store sells a TV for $1,200 and gives their customers a full three years to pay for the TV. If interest rates are 5 percent, what is the equivalent sales price of the TV when the customer takes the full 3 years to pay for it?

What is the value in year 15 of a $600 cash flow made in year 3 when the interest rates are 4 percent?

As the production manager of HPG, Inc., you have received an offer from the supplier who provides the wires used in headsets. Due to poor planning, the supplier has an excess amount of wire and is willing to sell $750,000 worth for only $600,000. You already have one year's supply of wire on hand. This new wire would be used one year from today. What implied interest rate would your firm be earning if you purchased the wire?

A firm's net income last year was $1.5 million. Its net income grew 5 percent during the last 5 years. If that growth rate continues, how long will it take for the firm's net income to double?

Consider a $500 deposit earning 5 percent interest per year for five years. How much total interest is earned on the original deposit (excluding interest earned on interest)?

The Rule of 72 is a simple mathematical approximation for:

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

Determine the interest rate earned on a $1,500 deposit when $1,680 is paid back in one year.

How much would be in your savings account in 7 years after depositing $100 today if the bank pays 5 percent interest per year?

A deposit of $300 earns interest rates of 7 percent in the first year and 10 percent in the second year. What would be the second year future value?

Compute the present value of $4,000 paid in five years using the following discount rates: 10 percent in year 1, 2 percent in year 2, 12 percent in year 3, and 9 percent in years 4 and 5.

What is the present value of a $500 payment made in 4 years when the discount rate is 8 percent?

You invested $1,000 for 5 years in an account that earns 5 percent. However, today you learn that you are able to move the account into an investment that earns 10 percent. Which of the following statements is correct?

You invested $1,000 in the stock market one year ago. Today, the investment is valued at $1,250. What return did you earn? What return would you suffer next year for your investment to be valued at the original $1,000?

A deposit of $700 earns interest rates of 10 percent in the first year and 7 percent in the second year. What would be the second year future value?