Financial Management

Present value of annuity problem  You will receive $1,000 at the end of the next 10 years, assuming a 7% discount rate, what is the present value of the cash flows?

Perpetuity problem  What is the value of a perpetuity with an annual payment of $100 and a discount rate of 6%?

Future value of annuity problem  You deposit $5,000 into a retirement account at the end of the next 15 years earning 8% interest, what is the future value of your retirement after 15 years?

Present value of annuity problem  You will receive $1,200 at the end of the next 15 years, assuming a 8% discount rate, what is the present value of the cash flows?

Perpetuity problem  What is the value of a perpetuity with an annual payment of $50 and a discount rate of 4%?

This unit focuses on an important tool used in our everyday lives. Based solely on time value of money techniques (rationale), do you think it is logical for people to over pay their taxes throughout the year and get a refund? Keep in mind the U.S. government does NOT credit you with interest for monies withdrawn from your paychecks throughout the year.