Time Value of Money (Part1)

Instructions: Below the problem statements for each of these time value of money problems, please find a video gallery of solutions for those problem statements. Click on the dropdown selection box on the upper left corner of the video to select a different video.

TVM01 – Future Value of a Single Sum

 This is a future value of a single sum problem.

What is the future value of $60,000 invested for 6 years compounded annually at an interest rate of 8.5%?

 TVM02 – Future Value of a Single Sum – Semiannual Interest

This is a future value of a single sum problem with interest compounded semiannually.

Assume that GE deposits $1,500,000 into the Ohio River Bank at the beginning of 2015 as a commitment toward building a new manufacturing plant to be completed December 31st, 2019. How much will the company have on deposit at the end of five years if interest is 8.5% compounded semi-annually?

 TVM03 – Present Value of a Single Sum

This is a present value of a single sum problem.

What is the present value of $115,292 to be paid in six years discounted at 11.5% compounded annually?

 TVM04 – Present Value of a Single Sum – Savings Example

This is a present value of a single sum problem.

Assume that your dad decides to give you $4,000 for a trip to Australia when you graduate from college four years from now. He proposes to finance a trip by investing a sum of money now at 7.5% compound interest that will provide you with the $4,000 upon your graduation. What amount must he invest today?

TVM05 – Present Value of a Single Sum – Unknown Number of Periods 

This is a problem in which the present value, future value and interest rate is known, but with an unknown number of compounding periods.

 Assume you want to accumulate $80,000 in a fund to build a new house. At the beginning of the current year, you deposit $50,000 in a fund that earns 10.5% compounded annually. How many years will it take to accumulate $80,000 in the fund?

 TVM06 – Present Value of a Single Sum – Unknown Interest Rate

This is a problem in which the present value, future value and the number of periods is known, and the interest rate is unknown.  Your company needs $1,500,000 to build a new manufacturing plant six years from now. Your company currently has $800,000 to invest to build this plant. At what rate of interest must it invest the $800,000 to fund the plant six years from now?

 TVM07 – Future Value of an Annuity

This is a future value of an annuity problem.

What is the future value of $6,000 deposits made at the end of the next six years earning interest of 8.5%?

 TVM08 – Future Value of an Annuity – Semiannual Periods

 This is a future value of an annuity problem. Assume that your company deposits $80,000 at the end of each six-month period for the next four years to accumulate enough money to meet debts that mature in four years. What is the future value that your company will have on deposit at the end of four years if the annual interest rate is 9.5%?

TVM01 – Future Value of a Single Sum

 

This is a future value of a single sum problem.

 

What is the future value of $60,000 invested for 6 years compounded annually at an interest rate of 8.5%?

 


TVM02 – Future Value of a Single Sum – Semiannual Interest

This is a future value of a single sum problem with interest compounded semiannually.

Assume that GE deposits $1,500,000 into the Ohio River Bank at the beginning of 2015 as a commitment toward building a new manufacturing plant to be completed December 31st, 2019. How much will the company have on deposit at the end of five years if interest is 8.5% compounded semi-annually?

 

 

TVM03 – Present Value of a Single Sum

 

This is a present value of a single sum problem.

 

 What is the present value of $115,292 to be paid in six years discounted at 11.5% compounded annually?

  

 

 

TVM04 – Present Value of a Single Sum – Savings Example

This is a present value of a single sum problem.

Assume that your dad decides to give you $4,000 for a trip to Australia when you graduate from college four years from now. He proposes to finance a trip by investing a sum of money now at 7.5% compound interest that will provide you with the $4,000 upon your graduation. What amount must he invest today?

TVM05 – Present Value of a Single Sum – Unknown Number of Periods

 

This is a problem in which the present value, future value and interest rate is known, but with an unknown number of compounding periods.

 

 Assume you want to accumulate $80,000 in a fund to build a new house. At the beginning of the current year, you deposit $50,000 in a fund that earns 10.5% compounded annually. How many years will it take to accumulate $80,000 in the fund?

 

 

TVM06 – Present Value of a Single Sum – Unknown Interest Rate

This is a problem in which the present value, future value and the number of periods is known, and the interest rate is unknown,

Your company needs $1,500,000 to build a new manufacturing plant six years from now. Your company currently has $800,000 to invest to build this plant. At what rate of interest must it invest the $800,000 to fund the plant six years from now?

 

TVM07 – Future Value of an Annuity

 

This is a future value of an annuity problem.


What is the future value of $6,000 deposits made at the end of the next six years earning interest of 8.5%?

 

 

TVM08 – Future Value of an Annuity – Semiannual Periods

 

This is a future value of an annuity problem.

 Assume that your company deposits $80,000 at the end of each six-month period for the next four years to accumulate enough money to meet debts that mature in four years. What is the future value that your company will have on deposit at the end of four years if the annual interest rate is 9.5%?