MBA/MSF 655 FinancialManagment & Strategy

Time Value of Money-AdditionalPractice

Draw Time Lines & Show Calculator Work!!

1. What amount received at the end of 20 years is equivalent to $100 today, given an opportunity cost of 14%?

2.What amount received at the end of 15 years is equivalent to $100 received at the end of each year for 15 years, given an opportunity cost of 12%?

3. What present amount is equivalent to $100 received at the end of 5 years, given an opportunity cost of 16%?

4. What present amount is equivalent to $100 received at the end of each year for 8 years, given an opportunity cost of 20%?

5. Find the future value in 2 years of $100 that is deposited in an account which pays 12% compounded monthly.

6. Find the present value of $100 to be received at the end of 2 years if the discount rate is 12% compounded monthly?

7. Find the present value of a perpetuity of $1500 per year given a 20% opportunity cost.

8. If the present value of a perpetuity is $6000 ant the discount rate is 8%, what is the amount of the annuity payments?

9. At an 8% interest rate, how long does it take for a sum of money to double?

10. What is the rate of return on an investment if you lend $100 and 2 years later are repaid $1254.70?