BFIN 2201 – Time Value of Money Assignment 1
1. If the present value of an investment is $500 and the interest rate is 6%, how much will
the investment be worth in 12 years?
a. What type of problem is this: lump sum or annuity?
b. Fill in each of the following (Note: one of the answers is unknown – write ?):
PV = 500
FV = $1,006.10
CF = ?
t = 12
r = 6%
c. Draw a time line
d. Write the appropriate formula.
e. Solve the problem.
2. If the value of an investment is $1500 in 12 years and the interest rate is 6%, how much
is the investment worth now?
a. What type of problem is this: lump sum or annuity?
b. Fill in each of the following (Note: one of the answers is unknown – write ?):
PV = 7454.54
FV = 15000
CF =?
t = 12
r = 6%
c. Draw a time line
d. Write the appropriate formula.
e. Solve the problem.
3. If you invest $100 per year for 12 years at an interest rate of 6%, how much money will
be in the account in the future?
a. What type of problem is this: lump sum or annuity?
b. Fill in each of the following (Note: one of the answers is unknown – write ?):
PV = 100
FV = 201.22
CF = ?
t = 12
r = 6%
c. Draw a time line
d. Write the appropriate formula.
e. Solve the problem.
4. If your goal is to have $10,000 in a bank account in 12 years at an interest rate of 6%,
how much money must you invest per year?
a. What type of problem is this: lump sum or annuity?
