For questions 1 through 10: On a word document (Document 1), identify what type of TVM...

For questions 1 through 10: On a word document (Document 1), identify what type of TVM problem(s) are being used from the following list: • Present value • Future value • Present value of an annuity • Future value of an annuity • Annuity of a present value • Interest rate Identify the financial calculator you are using and list the keys to be used to solve the problem, including an answer.

2. Bob wants to propose marriage to Sue. He wants to buy a $2,000 ring in 11 months. How much must he save monthly in order to be able to buy the ring if he can earn 9% on his money?

3. Beverly is offered $1,000 four years from now. If she desires a 13% annual return, how much would she be willing to pay for this?

4. Ted and Jill have just bought a home for $200,000. If they can get a thirty year fixed rate mortgage at 6.75% on a 75% Loan to Value, how much will their monthly payment be?

5. You've just won the lottery! The prize is $20,000,000, payable in twenty-five equal, annual installments. If you require 7.5% from your investments, how much money in PV dollars have you actually won?

6. I offer you $350 now in return for repayment of $650 six years from now. What is the interest rate that I'm charging you?

7. I am 28 years old and plan on retiring at age 65. I spend $4 each day on my favorite coffee like beverage at Starbucks. If I forego my daily Starbucks and can instead invest my money at a return rate of 10%, how much extra money will I have at the time of my retirement?

8. I am 31 years old and have $30,000 in savings. I plan on saving $1,000 per month until I retire at age 68. I'm of the opinion that I can make 9% on my investments. If the actuaries say that I will live to be 94,and I shift my post-retirement savings to a safer portfolio that delivers a 4% return, how much can I take each month from my portfolio and end up with exactly no money when my time is up?

9. A $1,000 par value bond matures in 8 years. It has a 7% coupon rate, with semi-annual interest payments. The yield (the rate at which investors are using to calculate the price of the bond) is 8%. What is the fair market value of the bond?

10. I expect to receive the following cash flows over the next three years: Year 1 $2,000 Year 2 $3,000 Year 3 $5,000 If my discount rate is 9%, what is the present value of this cash flow series?

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jeff jeffy answered 1 year ago

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