Time value of money is an important concept in understanding firm valuation. Display your mastery of the time value of money by answering the following: (parts a, b, c, d, e, f) A credit card account that charges interest at the rate of 0.85% per month would have an effective annually compounded rate of and an APR of What is the present value of your trust fund if it promises to pay you $75,000 on your 37th birthday (5 years from today) and earns 5% compounded annually? "Give me $10,000 today and I'll return $37,000 to you in five years, " offers your investment broker. To the nearest tenth of a percent, what annual interest rate is being offered? How much money would you have to put away at the end of each year to have $1, 250,000 when you retire 30 years from now if you can earn 3% on your money? How much can be accumulated if $2, 400 is deposited at the end of each month for the next 28 years, if the account earns 4.2% APR (i.e. 0.35% per month). Assume the total expense for your current year in college equals $24,000. Approximately how much would you have needed to invest 9 years ago in an account paying 4.5% compounded annually to cover this amount