TV Problems(1)

TIME VALUE OF MONEY PRACTICE PROBLEMS

The AMOUNT listed in Table 1 is invested in an account paying the indicated interest rate, for the listed term and compounding interval. The answer is the calculated value at the end of the indicated term.

For example, the first line of the table is investing $1250 in an account earning 6% interest (compounded annually) for 1 year.

The last column in the table is investing $18,000 in an account paying
11 15/16% interest (compounded daily) for 44 1/2 years.

Table 1

AMOUNT	RATE	COMPOUNDING INTERVAL	YEARS	ANSWER
$1250	6.00%	Annual	1	$1325
$1800	7.10%	Annual	2	$2064.67
$2750	5 ¾%	Annual	9	$4548.37
$4225	7 ¼%	Semi Annually	6	$6477.41
$5665	6 ½%	Semi Annually	11	$11449.36
$6250	9 1/8%	Quarterly	22	$45491.54
$6995	11 5/8%	Quarterly	3	$9864.81
$7000	8 3/8%	Weekly	12	$19107.90
$7500	16 7/8%	Weekly	9 ¼	$35634.46
$8000	15 2/3%	Weekly	10 ½	$41345.70
$8250	7.7%	Monthly	11 ¾	$20329.50
$8666	8 1/8%	Monthly	7	$15275.35
$9125	6.33%	Monthly	18 ¼	$28899.12
$11250	7.225%	Daily	5.25	$16438.78
$22222	9.6175%	Daily	7 3/8	$45163.08
$5500	14.9138%	Daily	8 5/8	$19901.61
$6195	9 11/16%	Daily	9 3/4	$15929.11
$7175	10 13/16%	Daily	22.25	$79521.53
$18000	11 15/16%	Daily	44 1/2	$3647111.22

For table 2, the amount in the first column is the amount that we will have in an account if invested at the given interest rate, compounding period and number of years. Our task is to calculate what we would need to deposit TODAY to have the stated amount.

Table 2

AMOUNT	RATE	COMPOUNDING INTERVAL	YEARS	ANSWER
$1250	6.00%	Annual	1	$1179.25
$1800	7.10%	Annual	2	$1569.26
$2750	5 ¾%	Annual	9	$1662.68
$4225	7 ¼%	Semi Annually	6	$2755.83
$5665	6 ½%	Semi Annually	11	$2802.97
$6250	9 1/8%	Quarterly	22	$858.68
$6995	11 5/8%	Quarterly	3	$4960.06
$7000	8 3/8%	Weekly	12	$2564.38
$7500	16 7/8%	Weekly	9 ¼	$1578.53
$8000	15 2/3%	Weekly	10 ½	$1547.92
$8250	7.7%	Monthly	11 ¾	$3185.93
$8666	8 1/8%	Monthly	7	$4916.39
$9125	6.33%	Monthly	18 ¼	$2881.27
$11250	7.225%	Daily	5.25	$7699.02
$22222	9.6175%	Daily	7 3/8	$10934.09
$5500	14.9138%	Daily	8 5/8	$1519.98
$6195	9 11/16%	Daily	9 3/4	$2409.30
$7175	10 13/16%	Daily	22.25	$647.38
$18000	11 15/16%	Daily	44 1/2	$88.84

For table three, calculate the amount of the annuity if the value in the "amount" column is invested under the given interest rate and term. Remember, the cash flow frequency MUST equal the compounding interval. [i.e., monthly deposits must be compounded monthly.]

Table 3

AMOUNT	RATE	YEARS	ANSWER
$100 monthly	7.75%	5 1/2	$8,197
$200 monthly	8.125%	8	$26,920
$450 monthly	9 1/4%	9 1/4	$78,527
$50 weekly	6 5/8%	10 1/4	$38,114
$75 weekly	7 2/3%	5.7	$27,854
$100 weekly	6 3/4%	12 3/4	$105,026
$250 quarterly	8 3/8%	21 1/2	$59,008
$500 quarterly	9 1/2%	7	$19,567
$1000 quarterly	10%	10	$67,403
$1000 semi-annually	11.7%	9	$30,470
$1500 semi-annually	12 11/16%	17 3/4	$186,258
$2500 semi-annually	8 7/8%	10.8	$87,575
$2500 annually	9.125%	11.25	$45,776
$5000 annually	8.375%	15	$139,789
$7000 annually	7.625	15	$184,608
$1000 monthly	6.1875%	9 1/2	$154,634
$250 weekly	10 3/4%	20	$914,937
$6000 semi-annually	11.5625%	33	$4,133,654
$12000 annually	12.5%	18.25	$727,768

Table 4 calculates the present value of the annuity under the terms given.

Table 4

AMOUNT

RATE

YEARS

ANSWER

$100 monthly 7.75% 5 1/2 $5,360

$200 monthly 8.125% 8 $14,084

$450 monthly 9 1/4% 9 1/4 $33,485

$50 weekly 6 5/8% 10 1/4 $19,336

$75 weekly 7 2/3% 5.7 $17,999

$100 weekly 6 3/4% 12 3/4 $44,440

$250 quarterly 8 3/8% 21 1/2 $9,931

$500 quarterly 9 1/2% 7 $10,141

$1000 quarterly 10% 10 $25,103

$1000 semi-annually 11.7% 9 $10,951

$1500 semi-annually 12 11/16% 17 3/4 $20,982

$2500 semi-annually 8 7/8% 10.8 $34,283

$2500 annually 9.125% 11.25 $17,139

$5000 annually 8.375% 15 $41,835

$7000 annually 7.625 15 $61,313

$1000 monthly 6.1875% 9 1/2 $86,035

$250 weekly 10 3/4% 20 $106,813

$6000 semi-annually 11.5625% 33 $101,242

$12000 annually 12.5% 18.25 $84,812