10. Time Value of Money

Why is one dollar today worth more than one dollar in the future?

To what amount will $P invested for n years at an annual interest rate of r percent, compounded annually, accumulate?

The process for converting present values into future values is called:

Approximately what annual interest rate, compounded annually, is needed to double an investment over six years?

What is the present value of \$1,000 to be received in 12 years, assuming an annual interest rate of 8\% compounded annually?

If you borrow \$20,000 for 5 years at an annual interest rate of 8\% compounded monthly, what would the monthly payment be?

London Motors offers to sell a \$24,000 car for \$470 per month over 60 months. Using the time value of money equation for an ordinary annuity, what is the approximate monthly interest rate (rounded to the nearest tenth of a percent)?

If Tom borrows \$6,000 at a compound interest rate and must repay \$7,260 after 2 years, what is the annual compound interest rate?

If you purchase a \$100 Series EE savings bond and hold it for 30 years at a fixed annual interest rate of 3%, compounded semiannually, how much will the bond be worth at maturity? (Assume no early redemption and no tax considerations.)

Which of the following should be valued using a perpetuity formula?

Which of the following equations correctly represents the future value (FV) of a single sum invested today for \(n\) years at an annual interest rate \(r\), compounded once per year?

Which of the following factors affects the present value of an investment?

Which of the following formulas would most likely represent the present value of an ordinary annuity factor, where \(r\) is the interest rate per period and \(n\) is the number of periods?

Which of the following best describes the formula \( EAR = (1 + \frac{rate}{m})^m - 1 \)?

Which rate is used to discount future cash flows to their present value when valuing Treasury Inflation-Protected Securities (TIPS)?