Question
1. Find the present value of $400 received 4 years from now with a discount rate of 9%. 2nd CLR TVM ________ FV 4 ______
1. Find the present value of $400 received 4 years from now with a discount rate of 9%. 2nd CLR TVM ________ FV 4 ______ ______ I/Y CPT _______ Answer: _____________ 2. We need to spend $20,000 per year for 3 years on new restaurant equipment. How much do we need to have in an account to afford this if we earn 5% on our investments? __________________ 20,000 _________ _______ N _______ 1/Y CPT _______ Answer: _____________ 3. You borrow $40,000 for 7 years at an annual interest rate of 6%. 1) Calculate the loan payment. __________________ 40,000 ______ ______ N ______ 1/Y CPT ________ Answer: _____________ 2) Calculate the amount of interest and principal paid in the first year. Interest: _______________________________________________________ Principal: ______________________________________________________ 4. You just won the lottery. The prize is 20 equal payments of $50,000 with the first to be received today. What is the present value of the prize if the discount rate is 8%? ___________________________________________ ____________________ 50,000 ___________ ____ N ____ 1/Y CPT _______ Answer: _________________ 5. Kate is saving for her sons college tuition. She needs $40,000 in 15 years, $42,000 in 16 years, $45,000 in 17 years and $50,000 in 18 years. Assuming she can earn 10% on investments, how much does Kate need to afford the tuition? Calculator Step (1) Calculator Step (2) Calculator Step (3) Calculator Step (4) 2nd CLR TVM 2nd CLR TVM 2nd CLR TVM 2nd CLR TVM 40,000 _______ 42,000 _______ 45,000 _______ 50,000 _______ ________ N ________ N ________ N ________ N ________ 1/Y ________ 1/Y ________ 1/Y ________ 1/Y CPT __________ CPT __________ CPT __________ CPT __________ Answer: ____________ Answer: ____________ Answer: ____________ Answer: ____________ FINAL Answer: _______________________________________
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