4_17_20 Time Value of Money Exercises (1) - Word Search Justin Design Layout References Mailings Review View Help ECON/REAL 204 TIME VALUE of MONEY EXERCISES SPRING 2020 1. You have just had a tenant sign a lease contract that guarantees you payments of $100,000 at the end of each year for the next five years. What is the present value of these future cash flows assuming an 8% discount rate? 2. Suppose an investor deposits $2500 in an interest-bearing account at her local bank. The account pays 2.5% interest compounded annually. If the investor plans on withdrawing the original principal plus accumulated interest at the end of 7 years, what is the total amount that she should expect to receive assuming interest rates do not change? 3. An investor agreed to sell a warehouse 5 years from now to the tenant who currently rents the space. The tenant will continue to pay $20,000 rent at the end of each year including year five in which he will purchase the building for an additional $150,000. Assuming the investor's required rate of return is 10%, how much is this deal presently worth to the investor who was willing to sell? 4. Assuming that an investor requires a 10% annual yield over the next 12 years, how much would she be willing to pay for the right to receive $20,000 at the end of year 12? D.Focus -arch DALL