The objective of this assignment is to reinforce your understanding of Time Value of Money (TVM) concepts and calculations. Through this assignment, you will perform five different TVM calculations to analyze financial scenarios involving present value, future value, interest rates, and periodic payments.
Submission Guidelines:
Solve each problem individually, showing all relevant calculations and steps.
Clearly label your solutions, including the problem number.
If using a spreadsheet, submit the spreadsheet file (e.g., Excel) or screenshots of your calculations.
If using a calculator, neatly write out or type your calculations and provide explanations where necessary.
Submit as an attachment or type directly into the submission box below.
Instructions:
In this assignment, you will apply Time Value of Money principles to solve various financial scenarios. Use calculators or spreadsheet tools to perform the calculations accurately. Round your answer to two decimal places.
Problem 1: Future Value Calculation (10 points)
You are considering investing $1,000 today in a savings account that offers an annual interest rate of 6%. Calculate the future value of this investment after 5 years.
Problem 2: Present Value Calculation (10 points)
You want to have $5,000 five years from now, and the current annual interest rate is 8%. Calculate how much money you need to invest today to achieve this goal.
Problem 3: Finding Interest Rate (15 points)
You are considering an investment that will double your money in 10 years. What annual interest rate does this investment offer?
Problem 4: Calculating Number of Periods (15 points)
You are saving for a down payment on a house. You have $20,000 today, and you plan to invest it in an account with an annual interest rate of 5%. How many years will it take for your savings to grow to $30,000?
Problem 5: Periodic Payment Calculation (20 points)
You want to buy a car that costs $25,000. You plan to make annual payments into a savings account with an annual interest rate of 7%. If you want to have the full purchase amount in 4 years, what should your annual payments be?
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