7Many financial calculator are available on line

Go to the present value portion of the Moneychimp web site:

http://www.moneychimp.com/calculator/present_value_calculator.htm

and work the following example:

You need $40,000 in 15 years. If you can earn 9.8% interest, how much do you need to invest today?

Enter the answer from Moneychimp here

8You just made your first $5,000 payment to your retirement plan with an annual rate of return @ 7% ( you will not make any additional payments)

A. What will your account be worth when you retire in 45 years?

Show your work here

B. What if you dont make that first payment now, but wait another 10 years, what will your account be worth when you retire?

9You will need $25,000 to start your business in 7 years.

A. If you can earn 5% on an initial investment, how much will you have to deposit today?

Show your work here

B. What if you want to start in 5 years, instead of 7 years?

Show your work here

C. What if you can earn 7% instead of 5%?

Show your work here

10You are looking at an investment that will pay $1200 in 5 years if you invest $1000 today. What is the implied rate of interest?

A. What Formula would you use to find the answer?

Show the formula (set up the formula, do not need to hand calculate)

B. What is the Function that you would use in Excel

Show the Excel function and calculate the answer

11You are offered an investment that will double your money in 6 years. You have $10,000 to invest. What is the implied rate of interest?

A. Demonstrate the easy answer (rule of 72)

B. Show the excel function and calculate the value

12Suppose you have a 1-year old son and you want to provide $75,000 in 17 years towards his college education.

You currently have $5,000 to invest. What interest rate must you earn to have the $75,000 when you need it?

A. Set up the formula to solve the problem (do not need to calculate the answer)

B. Show the excel function and calculate the value

13You want to purchase a new car and you are willing to pay $20,000. You can invest at 10% per year and currently have $15,000.

How long will it take before you have sufficient funds to pay cash for the car?

A. Set up the formula, do not need to hand calculate

B. Show excel function and calculate the answer in Excel