Solve various time value of money scenarios:

1. Jeff just hit the jackpot in Las Vegas and won $25,000! If he invests it now at a 12% interest rate, how much will it be worth in 20 years?

2. Evan would like to have $2,000,000 saved by the time he retires in 40 years. How much does he need to invest now at a 10% interest rate to find his retirement goal?

3. Assume that Stephanie accumulates savings of $1 million by the time she retires. If she invests this savings at 8%, how much money will she be able to withdraw at the end of each year for 20 years?

4. Katelyn plans to invest $2,000 at the end of each year for the next seven years. Assuming a 14% interest rate, what will her investment be worth seven years from now?

5. Assuming a 6% interest rate, how much would Danielle have to invest now to be able to withdraw $10,000 at the end of each year for the next nine years?

6. Jim is considering a capital investment that costs $485,000 and will provide the following net cash inflows: 

1st year.................$300,000 

2nd year................$200,000 

3rd year.................$100,000 

Using a hurdle rate of 12%, find the NPV of the investment.

7. What is the IRR of the capital investment described in question 6.

 

Scenario 1. Jeff just hit the jackpot in Las Vegas and won $30,000! If he invests it now at a 12% interest rate, how much will it be worth in 20 years? (Round your answer to the nearest whole dollar.) Future value = $ Scenario 2. Evan would like to have $3,000,000 saved by the time he retires in 30 years. How much does he need to invest now at a 14% interest rate to fund his retirement goal? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 3. Assume that Tina accumulates savings of $1 million by the time she retires. If she invests this savings at 8%, how much money will she be able to withdraw at the end of each year for 20 years? (Round your answer to the nearest whole dollar and enter as a positive amount.) Amount able to withdraw = $ Scenario 4. Cathy plans to invest $2,500 at the end of each year for the next eight years. Assuming a 14% interest rate, what will her investment be worth eight years from now? (Round your answer to the nearest whole dollar.) Future value = $ Scenario 5. Assuming a 12% interest rate, how much would Katie have to invest now to be able to withdraw $9,000 at the end of every year for the next nine years? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 6. Chuckie is considering a capital investment that costs $535,000 and will provide net cash inflows for three years. Using a hurdle rate of 8%, find the NPV of the investment. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign to represent a negative NPV. Net Present Value (NPV) = $ Scenario 7. What is the IRR of the capital investment described in Question 6? The IRR is the interest rate at which the investment NPV = 0. We tried 8% in question 6, now we'll try 10% and calculate the NPV. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign to represent a negative NPV.) Net Present Value (NPV) = $ The IRR for the project is