Time Value of Money

Discuss the relevant terms and issues relating to time value of money and solve the problems. It is recommended that you use a spreadsheet (Excel) for your calculations

1 Calculate future values

a) Figure out future the value of a single deposit of 15,000, that earns compound interest for 4

years at an interest rate of 10% per year.

b) The annual interest rate that will produce a future value of 13,416.80 in 6 years form a single

deposit of 8,000.

c) The size of annual cash flows for an annuity of nine cash flows that will produce a future value

of 79,428.10 at an interest rate of 0.09 per year.

d) The number of periods needed to produce future value of 17,755.5 from an initial deposit of

7500, if the annual interest rate is 9% p.a.