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    #1

    Oct 24, 2008, 01:55 PM
    Time Value of Money
    You want to buy a condo 5 years fron now, and you plan to save $3,000 per year, beginning one year from today. You will deposit the money in an account that pays 6% interest. How much will you have just after you make the 5th deposit, 5 years from now?
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    #2

    Oct 24, 2008, 01:56 PM
    Your father is about to retire, and he wants to buy an annuity that will provide him with $50,000 of income per year for 20 years, beginning a year from today. The going rate on such annuities is 6%. How much would it cost him to buy such an annuity today?
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    #3

    Oct 24, 2008, 01:57 PM
    Suppose you inherited $200,000 and invested it at 6% per year. How much could you withdraw at the end of each of the next 15 years?
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    #4

    Oct 24, 2008, 01:59 PM
    An investment promises the following cash flow stream: $1,000 at Time 0; $2,000 at the end of Year 1 (or at T=1); $3,000 at the end of Year 2; and $5,000 at the end of Year 3. At a discount rate of 5%, what is the present value of the cash flow stream?
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    #5

    Oct 24, 2008, 02:00 PM
    What's the future value of $2,000 after 3 years if the appropriate interest rate is 8%, compounded monthly?
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    #6

    Oct 24, 2008, 02:02 PM
    Suppose you borrowed $25,000 at a rate of 8% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be?
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    #7

    Oct 24, 2008, 02:04 PM
    You are buying your first house for $220,000, and are paying $30,000 as a down payment. You have arranged to finance the remaining $190,000 30 -year mortgage with a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make?
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    #8

    Oct 24, 2008, 02:06 PM
    Your sister turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 10% per year. She plans to retire 35 years from today, when she turns 65, and she expects to live for 30 years after retirement, to age 95. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year.
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    #9

    Oct 24, 2008, 02:08 PM
    A real estate investment has the following expected cash flows:
    Year 1 $10,000
    Year 2 $25,000
    Year 3 $50,000
    Year 4 $35,000
    If the discount rate is 8%, what is the investment's present value?
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