The Value of Money in Time

Find the required value for each problem. Show the formula used and the computations for each problem. 1. Jane Morrison is planning to invest $ 25,000 today in a mutual fund that provides a yield of 8% compounded annually. What will the investment be worth in ten years? 2. Ramon Rivera is investing $ 7,500 in a CD from a bank that pays 6% interest compounded annually. How much will he have earned at the end of five years? 3. Maria Lebron is considering an investment that pays 7.6% interest compounded annually. How much would you have to invest today if you expect this investment to bring you $ 25,000 in six years? 4. Elizabeth Terrier wants to accumulate $ 12,000 after 12 years. If the annual compound interest rate paid by your savings account is 9.25%, how much money would you have to deposit in your account to day to reach your goal? 5. Carolina Carlo needs to decide whether to accept a $ 17,000 bond today or wait two years and receive $ 20,100. The CAGR she could invest in is 6%. What should Carolina do? 6. How much more would you earn in three years if you invest $ 10,000 at a compound annual interest rate of 5.75%, instead of a simple interest rate of 5.75%? 7. What would be the compound annual interest rate you would need to double your investment of $ 1,000 in three years? 8. If your bank pays you 5% annual interest, compounded monthly, how much would you have in ten years if you invest $ 1,000 today? 9. How much would you have to deposit today into a bank account that pays 9.25% annual interest, compounded quarterly, if you expect to have $ 20,000 at the end of five years? 10. Suppose you invested $ 2,500 in the business that a friend of yours started and that in three years this friend returned you $ 3,700. How much was the return on your investment in your friend's business