Solve various time value of money scenarios i More Info 0 Reference Present Value of $1 Periods 1. Eddie just hit the jackpot in Las Vegas and won $70,0001 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 $3,500,000 saved by the time he retires in 40 years. How much does he need to invest now at a 12% interest rate to fund his retirement goal? 3. Assume that Maria accumulates savings of $1 million by the time she retires. If she invests this savings at 10%, how much money will she be able to withdraw at the end of each year for 15 years? 4. Bonnie plans to invest $3,500 at the end of each year for the next eight years. Assuming a 12% interest rate, what will her investment be worth eight years from now? 5. Assuming a 10% interest rate, how much would Terri have to invest now to be able to withdraw $14,000 at the end of every year for the next ten years? 6. Chuckie is considering a capital investment that costs $530,000 and will provide the following net cash inflows: 2 3 4 5 5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 6% 0.943 0.890 0.840 0.792 0.747 8% 0.926 0.857 0.794 0.735 0.681 0.630 0583 0.540 0.500 0.463 10% 0.909 0.826 0.751 0.683 0 621 0.564 0.513 0.467 0.424 0.386 12% 0.893 0.797 0.712 0.636 0567 14% 0.877 0.769 0.675 0.592 0519 16% 0.862 0.743 0.641 0.552 0.476 1% 2% 3% 4% 0.990 0.980 0.971 0.962 0.980 0.961 0.943 0.925 0.971 0.942 0.915 0.915 0.889 0.961 0.924 0.888 0.855 0951 0908 0.863 0822 0.942 0.888 0.837 0.790 0.933 0.871 0.813 0.760 0.923 0.853 0.789 0.731 0.914 0.837 0.766 0.703 0.905 0.820 0.744 0676 0.896 0.804 0.722 0.650 0.887 0.788 0.701 0.625 0.879 0.773 0.681 0.601 0.870 0.758 0.661 0.577 0.881 0.743 0.642 0.555 0.820 0.673 0.554 0.456 0.780 0.610 0.478 0.375 0.742 0.552 0.412 0308 0.672 0.453 0.307 0.208 18% 0.847 0.718 0.609 0.516 0437 20% 0.833 0.694 0.579 0.482 0402 6 7 8 9 10 0.705 0.665 0.627 0.592 0.558 0.507 0.456 0.410 0.452 0.400 0.354 0.404 0.351 0.305 0.361 0.308 0.263 0.322 0.270 0.227 0.287 0.237 0.195 0.257 0.208 0.168 0229 0.182 0.145 0.205 0.160 0.125 0.183 0.140 0.108 11 12 13 14 15 Year Net Cash Inflow 1 $308,000 $208,000 3 $96,000 Using a hurdle rate of 8%, find the NPV of the investment. 7. What is the IRR of the capital investment described in Question 6? 0.585 0.557 0.530 0.505 0.481 0.527 0.497 0.469 0.442 0.417 0.429 0.397 0.368 0.340 0.315 2..... 0.370 0.335 0314 0279 0.266 0.233 0.228 0.194 0.191 0.162 0.162 0.135 0.137 0.112 0.116 0.093 0.099 0.078 0.084 0.065 0.037 0.026 0.016 0.010 0.007 0.004 0.001 0.001 0.350 0.319 0290 0.263 0.239 0.149 0.092 0.057 0.022 20 25 30 40 0.377 0.312 0.295 0.233 0231 0.174 0.142 0.097 0.215 0.146 0.099 0.046 0.104 0.059 0.033 0.011 0.073 0.038 0.020 0.005 0.051 0.024 0.012 0.003 Reference Net Present Value (NP Future Value of $1 The IRR for the project Periods 2 1% 1.010 1 020 1.030 1.041 1.051 2% 1.020 1040 1.061 1.082 1.104 3% 1.030 1061 1.093 1.126 1.159 4% 1.040 1,082 1.125 1.170 1.217 6% 1.060 1.124 1.191 1.262 1.338 8% 1.080 1.166 1.280 1.360 1.469 10% 1.100 1210 1.331 1.464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 16% 1.160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 2.488 31 4 5 6 7 8 9 10 1.062 1.072 1.083 1,094 1.105 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.306 1.344 1.265 1.316 1.369 1.423 1.480 5% 1.050 1. 103 1.158 1.216 1.276 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.896 1.990 2079 2.653 3386 4.322 7.040 1.419 1.504 1.594 1689 1.791 1.974 2.211 2.476 2.773 3.106 2.436 2.826 3.278 3.803 4.411 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 1.772 1.949 2.144 2358 2.594 2.850 3.138 3.452 3.797 4.177 2.195 2.502 2.853 3.252 3.707 4.226 4.818 5.492 6.261 7 138 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 11 12 13 14 15 1.116 1.127 1.138 1.149 1.161 1220 1282 1.348 1.489 1.243 1.268 1.294 1.319 1 346 1.384 1.426 1.469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 2.191 2.666 3.243 4.801 1.898 2.012 2.133 2261 2397 3.207 4292 5.743 10.286 3.479 3.896 4.363 4.897 5.474 9.646 17.000 29.960 93.051 5.117 5.936 6.886 7.988 9.266 19.461 40.874 85.850 378.721 2.986 3.583 4.300 5.160 6.192 7.430 8.916 10.699 12839 15.407 38 338 95 396 237.376 1,469.772 Enter any number in til 20 25 30 40 1.486 1.641 1.811 2.208 1.806 2.094 2427 3.262 4.661 6.848 10.068 21.725 6.727 10.835 17.449 45.259 13.743 26.462 50.950 188,884 27.393 62.669 143.371 750 378 Reference - Reference Periods Periods 1 1 14% 0.877 1.647 2.322 2.914 3.433 2 3 4 5 16% 0.862 1.605 2.246 2.798 3.274 18% 0.847 1.566 2.174 2.690 3.127 2.775 20% 0.833 1.528 2.106 2.589 2.991 3.326 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 6.468 7.662 12% 1.000 2.120 3.374 4.779 6.353 14% 1.000 2.140 3.440 4.921 6.610 4% 1.000 2.040 3.122 4.246 5.416 6.633 7.898 9.214 10.583 12.006 16% 1.000 2. 160 3.506 5.066 6.877 18% 1.000 2.180 3.572 5.215 7.154 3 4 5 20% 1.000 2.200 3.640 5.368 7.442 6 3.889 7 5.206 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 3.605 4.288 Present Value of Annuity of $1 1% 2% 3% 4% 5% 6% 8% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 2.941 2.884 2.829 2.723 2.673 2.577 2.487 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 6.728 6.472 6.230 6.002 5.786 5.582 4.868 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 3.685 4.039 4.344 4.607 3.498 3.812 4.078 4.303 8 9 10 6 7 8 9 10 6.308 7.434 8.583 9.755 10.950 8.892 8.115 10.089 12.300 14.776 17.549 8.536 10.730 13.233 16.085 19.337 4.833 4.494 10.159 11.464 Future Value of Annuity of $1 5% 6% 8% 10% 1.000 1.000 1.000 1.000 2.050 2.060 2.080 2.100 3.153 3.184 3.246 3.310 4.310 4.375 4.506 4.641 5.526 5.637 5.867 6.105 6.802 6.975 7.336 7.716 8.142 8.394 8.923 9.487 9.549 9.897 10.637 11.436 11.027 11.491 12.488 13.579 12.578 13.181 14.487 15.937 14.207 14.972 16.645 18.531 15.917 16.870 18.977 21.384 17.713 18.882 21.495 24.523 19.599 21.015 24.215 27.975 21.579 23.276 27.152 31.772 33.066 36.786 45.762 57 275 47.727 54.865 73.106 98.347 66.439 79,058 113.283 164.494 120.800 154.762 259.057 442.593 4.639 4.946 5.216 5.453 5.660 5.842 6,002 6.142 6.623 6.873 7.003 11 12 13 14 15 5.029 5.197 5.342 5.468 5.575 5.929 6.097 6.177 6.233 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.656 4.793 4.910 5.008 5.092 5.353 5.467 5.517 5.548 6.152 7.214 8.286 9.369 10.462 11.567 12.683 13.809 14.947 16.097 8.977 11.414 14.240 17.519 21.321 25.733 30.850 36.786 43.672 51.660 9.442 12.142 15.327 19.086 23.521 28.755 34.931 42.219 50.818 60.965 9.930 12.916 16.499 20.799 25.959 32.150 39.581 48.497 59.196 72.035 11 12 13 14 15 12.169 13.412 14.680 15.974 17.293 12.808 14.192 15.618 17.086 18.599 13.486 15.026 16.627 18.292 20.024 20.655 24.133 28.029 32.393 37.280 23.045 27.271 32.089 37.581 43.842 20 25 30 40 7.469 7.843 8.055 8.244 4.870 4.948 4.979 4.997 20 25 30 40 22.019 28.243 34.785 48.886 24.297 32.030 40.568 60.402 26.870 36.459 47.575 75.401 29.778 41.646 56.085 95.026 72,052 133.334 241.333 767.091 91.025 115.380 146.628 186.688 181.871 249.214 342.603 471.981 356.787 530.312 790.948 1,181.882 1,342.025 2,360.757 4,163.2137.343.858 7.105 Scenario 1. Eddie just hit the jackpot in Las Vegas and won $70,000! 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 $3,500,000 saved by the time he retires in 40 years. How much does he need to invest now at a 12% interest rate to fund his retirement goal? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 3. Assume that Maria accumulates savings of $1 million by the time she retires. If she invests this savings at 10%, how much money will she be able to withdraw at the end of each year for 15 years? (Round your answer to the nearest whole dollar and enter as a positive amount.) Amount able to withdraw = $ Scenario 4. Bonnie plans to invest $3,500 at the end of each year for the next eight years. Assuming a 12% 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 10% interest rate, how much would Terri have to invest now to be able to withdraw $14,000 at the end of every year for the next ten years? (Round your answer to the nearest whole dollar.) Present value = $ Scenario 6. Chuckie is considering a capital investment that costs $530,000 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