Time Value Of Money Paper

You have been making payments for the last 25 years and have finally paid off your mortgage. Your original mortgage was for $345,000 and the interest rate was 5% per year compounded semi-annually for the entire 25 year period. How much interest have you paid over the last 5 years of the mortgage?

I would opt to take the $5,000 now, combine it with the existing saving of $10,000, and invest it at the 3% interest rate. The average 3% rate of return would produce earned interest of $463.64, which would exceed the three-year return of $250.00 by $213.64.

What annual interest rate is needed to produce $200,000 after five years if only $100,000 is invested?

FVN = FV5= PV × (1 +I)N = $500 x (1 + 0.08)5 = $500 x (1.08)5 = $734.66

If the present is Year 0 and rates compound annually, in what year does the first outlay of $45,000 occur? Hint, you’re using the perpetuity approach to valuation.

A person deposited $500 in a savings account that pays 5% annual interest that is compounded yearly. At the end of 10 years, how much money will be in the savings account? (Bluman, A. G. 2005, page 230).

The amount of money that I had spent over one week ended up totaling $100.77. To come up with the amount of money that would be spent in a year if I spent $100.77 for 52 weeks, the total would be $5,240.04. Then to determine the amount of money that would be spent over 25 years, it would be $5,240.04 multiplied by 25 years, and that would be $131,001. That is $131,001 that I spent on completely unnecessary expenses. To determine what $131,001 would equal in todays money it requires to be plugged into an equation, PV=FV/(1+i)^n . “FV” stands for the future value, that is the value that we calculated by multiplying by 25 years, $131,001. The “i” stands for the interest

Joe signs a $5000, 8%, 6-month note dated September 1, 2009. What is Joe’s 2010 interest expense for this note?

After the calculations you end up coming out with a rate of 14.87%. The third and final part of question three asks what rate you will need if the interest is compounded semiannually. All you have to do is double the amount of terms and you will come out with a lower number of 7.177%. Since the interest is compounded semiannually that means that you will need to times that number by two and you come out with your final number of 14.35%.

2. If you had a payment that was due you in 5 years for $50,000 and you could earn a 5% rate of return, how much

$25,000 if invested for 18 years at a 1.72% interest rate. The stated rate of

academic year interest rate of 3.76 percent would pay a 5,032 dollars interest over 10 years,

5. P = $40({1 – [1/(1 + .03)]26 } / .03) + $1,000[1 / (1 + .03)26]

(Compound value solving for I) at what annual rate would the following have to be investe

We then get the annuity of the 1,200 semiannual PMTs at year 6, and then at Present Value