Tvm of Money

Time Value of Money Extra Problem Set 1 1. You are planning to retire in twenty years. You 'll live ten years after retirement. You want to be able to draw out of your savings at the rate of $10,000 per year. How much would you have to pay in equal annual deposits until retirement to meet your objectives? Assume interest remains at 9%. [$1254] 2. You can deposit $4000 per year into an account that pays 12% interest. If you deposit such amounts for 15 years and start drawing money out of the account in equal annual installments, how much could you draw out each year for 20 years? [$19964.12] 3. What is the value of a $100 perpetuity if interest is 7%? [$1428.57] 4. You deposit $13,000 at the beginning of every year for 10 years. If interest is being paid at 8%, how much will you have in 10 years? [$203391.33] 5. You are getting payments of $8000 at the beginning of every year and they are to last another five years. At 6%, what is the value of this annuity? [35720.84] 6. How much would you have to deposit today to have $10,000 in five years at 6% interest compounded semiannually? [$7440.94] 7. Construct an amortization schedule for a 3-year loan of $20,000 if interest is 9%. 8. If you get payments of $15,000 per year for the next ten years and interest is 4%, how much would that stream of income be worth in present value terms? [$121663.50] 9. Your company must deposit equal annual beginning of year payments into a sinking fund for an obligation of $800,000 which matures in 15 years. Assuming you can earn 4% interest on the sinking fund, how much must the payments be? [$38415] 10. If you deposit $45,000 into an account earning 4% interest compounded quarterly, how much would you have in 5 years? [$54908.55] 11. How much would you pay for an investment which will be worth $16,000 in three years? Assume interest is 5%. [$13821]