| Time Value of Money Calculations |
David Charles wants to establish a scholarship fund for his alma mater. He wants the fund to provide $15,000 per
year to qualified students. Calculate how much he will need to have in the fund to provide that amount of money
each year using interest only, assuming that the fund earns 6% annually.
year to qualified students. Calculate how much he will need to have in the fund to provide that amount of money
each year using interest only, assuming that the fund earns 6% annually.
In addition to hear expected retirement income, Deborah Fairn wants some extra spending money when she retires.
She expects that the fund she wants to set up for this purpose will earn 5% annually, conservatively. How much will
she need to have in the fund at retirement in order to have $3,000 per year to spend?
She expects that the fund she wants to set up for this purpose will earn 5% annually, conservatively. How much will
she need to have in the fund at retirement in order to have $3,000 per year to spend?
Today, Sol Gibson purchased an investment-grade diamond for %50,000. He expects it to increase in value at a rate
of 15%, compounded annually, for the next 5 years. How much will had diamond be worth at the end of the 5th year
if his expectations are correct?
of 15%, compounded annually, for the next 5 years. How much will had diamond be worth at the end of the 5th year
if his expectations are correct?
Sophie Armstrong has been investing $1,000 at the end of each year for the past 15 years. How much has
accumulated, assuming she has earned 9%, compounded annually, on her investment?
accumulated, assuming she has earned 9%, compounded annually, on her investment?
Margaret Fowler wants to accumulate $70,000 for a down payment on a home in four years. She can invest $1,100
at the beginning of every month for the next four years. She expects to earn 12% per year, compounded monthly
on investments. Will she be able to attain her goal?
at the beginning of every month for the next four years. She expects to earn 12% per year, compounded monthly
on investments. Will she be able to attain her goal?
The cost of waiting:
George saves $2,000 per year for 6 years, then stops adding to his investment. The investment earns 10% per
year. George is 22 years old. How much money will he have when he retires at age 65?
Sam is 27 years old. How much will he have to invest every year to have the same amount at retirement as
George? Assume that his investment grows at 10% per year.
George saves $2,000 per year for 6 years, then stops adding to his investment. The investment earns 10% per
year. George is 22 years old. How much money will he have when he retires at age 65?
Sam is 27 years old. How much will he have to invest every year to have the same amount at retirement as
George? Assume that his investment grows at 10% per year.