For the problems below, You MUST:

a. Drawa time line.

b.Write the identity of the typeof TVM problem you are looking at.Use the following identifications:

PVLS,PVA, FVLS, FVA, PVA Payments, orFVA Payments.

c. ShowSTEP-BY-STEPhow you are calculating your answers using the format below. I will deduct points this step is not included (see below for format).

You can use a financial calculator or Excel to check your answer but I want to see the solution showing your processStep-by-Step.

d.Label your factor from the Tableswith thecorrect rate and time period(make sure your rate and period correspond to the time frame in the problem).See below.

REQUIRED FORMAT example:

Question:How much do I depositeach monthif I want $10,000 in 5 years at 6%?

YOUR written ANSWER would be the following:

a.Your timeline

01234.............................5

jQuery224011727491771429965_1603390984397???????????????????????????????????10,000

b. Problem Type: FVA PMT

c. Solution:

$??pmt xFVA factor (6%/12, 5*12) = $10,000

$?pmtx FVA factor (.5%, 60) = $10,000

$10,000/69.77= $143.33

Note: you must always adjust the rate and term in the formula as I have done above.

If you do not use this format for the problems,I will not read your homework answers.

(You may have to use this format more than once in a problem if it is a multipart problem.)

Lastly,I want to remind you that while younever, everadd up numbers occurring in different time periods (violation of the primary tenet of TVM),youcan add upvalues occurring in the same time period.

HomeworkProblems:

1.Barney is planning to become a resident at the Monks of New Skete monastery for 3 years.He must provide the money for all of his living expenses for the entire period the day he starts his retreat.If his living expenses are $24,000/year, what amount must he have in his account the day he arrives to cover his expenses. The rate he earns on his savings is 5%.

2.Refer to problem #1. What would your answer be if the rate were 18%?

3.Based on your answers from #1 and #2, finish the sentence: The higher the interest rate, the __________ present value.

4.Leandro is saving $400 every month into a savings account that earns 8%.How much will he have in 15 years?

5.Carl just received a loan of $12,000, with a rate of 8% and a term of 5 years. What would hismonthlypayments be?Remember the timing with a loan: you get the money first and then you make the payments. Be sure to draw this cashflow to determine what type of TVM cashflow this is.

6.Lori wants $12,000 in 5 years.How much must she save eachmonthif the account were to earn 9%?(Note that this payment is very different than the payment for #5)

7.Your Auntie Harriet wants to give you some money.The only thing is that she loves finance and so, decides to make it a bit of a challenge to get her money.She promises to pay you the following cashflow: $1500 in 1 year,$2,600 in year 2 and $3,000 in year 3.You have to tell her how much she must set aside in an account to meet those cash payments.Assume a 10% rate.

8.Harriet's best friend will also give you some money but has another TVM problem for you:She will give you $200 every 3 months for 10 years AND in addition tothe last $200 payment she will also give $10,000 to you (in year 10).Her question is how much does she have to set aside today in order to meet this cash flow.Assume a rate of 12%(Hint this has TWO TVM cash flows in it.Solve each separately and, since your answer will be in the same time period, add the two values up for a final answer).

9.You borrow $100,000 for a home loan for 10 years.If the payments are $1,801.85/month,what is the interest rate on this loan? Hint: set up timeline to determine which type of TVM problem matches this cashflow. Use the same general formula you used for all of the problems above.The only thing different here is theunknown is now the factorfrom the table.Use this factor to help you find the interest rate charged on this loan, but remember all rates are always quoted as annual equivalents.

10.You want to have $20,000 and can save only $1,073.00/quarter (every 3 months).What is the amount of time (in years) it will take to achieve your goal.Use the same strategy as you did for #9 above: Draw timeline, look at cashflow, identify cashflow, etc.