Time Value Of Money FE 3300 Fall 2009

1. The value today (t=0) of receiving $5,000 three years from today (t=3) is $_____. Note: Assume an interest rate of 6%.

$5,788.13

$4,985.00

$4,319.19

$4,198.10

$5,955.08

2. Assume you deposit $200 per year into an account earning 11%. Assume the first deposit is made exactly one year from today (t=1) and the last deposit is made in exactly 7 years (t=7). The account would be worth $_____ 10 years from today (t=10).

$1,956.65

$2,675.98

$1,400.00

$2,525.48

$1,897.43

3. Vijai is 23 years old today. He plans to deposit a certain amount into his retirement account today (t = 0) and on each birthday until he turns 65. He plans to withdraw $100,000 per year on each birthday beginning when he is 66 and ending when he is 89. The account will earn 7%. What must the deposits be?

$6,561.54

$6,693.26

$4,549.34

$4,628.90

$5,000.00

4. Chris just bought a brand new Corvette for $78,000. He made no down payment and will make monthly payments of $1,524.14 per months for 72 months. The interest rate on the loan is __________%p.a.

99.84%

0.99%

5.99%

8.54%

11.98%

5. Ashleigh bought a house that originally cost $250,000. Her down payment was 20%. It was a 30 year mortgage with a 6% interest rate and monthly payments. What is the remaining balance on her mortgage after 15 years?

$142,097.68

$143,892.00

$167,371.45

$196,875.34

$287,784.25