Solve various time value of money scenarios (Learning Objectives 3, 4)

1. Curt just hit the jackpot in Las Vegas and won \(\$ 50,000\) ! If he invests it now at a \(10 \%\) interest rate, how much will it be worth in 15 years?

2. Nathan would like to have \(\$ 1\) million saved by the time he retires in 20 years. How much does he need to invest now at a \(14 \%\) interest rate to fund his retirement goal?
3. Assume that Lydia accumulates savings of \(\$ 1,500,000\) by the time she retires. If she invests this savings at \(8 \%\), how much money will she be able to withdraw at the end of each year for 15 years?
4. Pam plans to invest \(\$ 3,000\) at the end of each year for the next ten years. Assuming a \(6 \%\) interest rate, what will her investment be worth ten years from now?
5. Assuming a \(12 \%\) interest rate, how much would Carol have to invest now to be able to withdraw \(\$ 20,000\) at the end of each year for the next ten years?
6. Roger is considering a capital investment that costs \(\$ 1,145,000\) and will provide the following net cash inflows:

Using a hurdle rate of \(14 \%\), find the NPV of the investment.
7. What is the IRR of the capital investment described Question 6?

Transcribed Image Text:

Year Net Cash Inflow 23 1 2 $600,000 500,000 3 400,000