Time Value of Money Problems

Time Value of Money Problems

Find the following values without using tables, and then work the problems with tables to check your answers.
1. An initial $300 compounded for 1 year at 8 percent.
2. An initial $300 compounded for 1 year at 8 percent.
3. The present value of $300 due in 1 year at a discount rate of 8 percent.
4. The present value of $300 due in 2 years at a discount rate of 8 percent.
Use the tables to find the following values.
1. An initial $300 compounded for 10 years at 8 percent.
2. An initial $300 compounded for 10 years at 16 percent.
3. The present value of $300 due in 10 years at a 8 percent discount rate.
4. The present value of $1,323.42 due in 10 years at a 16 percent discount rate.
Which amount is worth more at 10 percent: $1,000 in hand today or $2,000 due after 8 years?
Graper Corporation’s 1997 sales were $6 million. Sales were $3 million 5 years earlier ( in 1992). To the nearest percentage point, at what rate have sales been growing?

Oregon-Pacific invests $1 million to clear a tract of land and to set out some young pine trees. The trees will mature in 10 years, at which time Oregon-Pacific plans to sell the forest at an expected price of $3.1 million. To the nearest percent, what is Oregon-Pacific’s expected rate of return?

A bank offers to lend you $1,000 at a 10 percent annual rate of interest. The loan plus interest is due at the end of 5 years. What will you owe?

Your goal is to have $10,000 so that you will be able to start a small business, but you have only $7,473 today. I you can get an rate of 6 percent annually if you place this sum at interest, how long will it be before you can start your business?

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This page was last updated on Friday, July 21, 2006.