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?