Problem 2: Time Value of Money

Use the following tables to answer questions a thru d.

1. Assuming the time value of money is 8% per year compounded quarterly, calculate the present value on December 31, 2018 of a $1,000 cash amount occurring on December 31, 2022.

2. A deposit of $1,000 on January 1, 2019 will have a future value of $__________January 1, 2023 if it is invested at 8% per year and the interest is compounded quarterly.

3. The interest rate that is necessary for a deposit of $1,000 to grow to $5,474 after 15 years of interest compounded annually is __________% per year

4. The length of time required for an investment of $463 on December 31, 2018 to become $1,000 if the investment earns 8% compounded annually is __________ years.