Since answers are provided for all assigned problems, all calculations should be shown,step by step, done by using Excel and the Excel financial functions (e.g. =PV(), =NPER(), =PMT() etc.), and all answers should be thoroughly explained.

4-_assigned_questions.xls

Week 4

Problem Assignment: Time Value of Money
1	If you deposit $15,000 today and earn 8% annual interest, how much will you have in 9 years?
	Answer:	$29,985.07
2	Tiffany will receive a graduation gift of $10,000 from her parents in 3 years. If the discount rate
	is 7%, what is this gift worth today?
	Answer:	$8,162.98
3	What is the present value of a 20-year ordinary annuity of $30,000 using a 6% discount rate?
	Answer:	$344,097.64
4	You deposit $5,000 in an account that pays 8% interest per annum. How long will it take to double your money?
	Answer:	9 years
5	The Johnsons have $60,000 to use as a down-payment on a house, and they want to borrow $240,000
	from the bank. The current mortgage interest rate is 5%. If they make equal monthly payments for 30 years,
	how much will the monthly payment be?
	Answer:	$1,288.37
6	Tim paid $250 per month into his 401K retirement plan. After 30 years, he had accumulated $500,000. What
	average annual rate of interest had he earned over the 30 years?
	Answer:	9.42%
7	Charlotte's firm had sales of $525,000 in the year 2001. By 2012, sales had increased to $1,200,000. What was
	the average annual rate of increase?
	Answer:	7.80%
8	Alan had saved up $500,000. How much more must he save each year over the next 10 years in order to have a
	total of $2 million? Alan earns 5% interest, compounded annually.
	Answer:	$94,257