Principles of Finance

# Problems

1 .
Find the future value of $100 in five years at 5% interest. 2 . Find the future value of$1,800 in 3 years at 8% interest.
3 .
How much would you have to deposit now to have $15,000 in eight years if interest is 7%? 4 . What is the present value of$5,000 that will be paid to you eight years from today at 8% interest?
5 .
How many years will it take a $700 balance to grow into$900 in an account earning 5%?
6 .
If you borrow $1,000 and pay back$1,728 in three years, what annual rate of interest are you paying?
7 .
How long will it take you to triple your money at 8%?
8 .
A company’s sales were $250 million in 2019. If sales grow at 6% per year, how large will they be 10 years later, in 2029 (as expressed in millions)? 9 . A US government bond in the amount of$1,000 will mature in six years, has no coupon payments, and carries an interest rate of 8%. What is the value of this bond today?
10 .
You spend $725.00 to purchase a$1,000 bond that will have no coupon payments and matures in 12 years. What interest rate will you be earning on this bond?
11 .
At what interest rate would you be ambivalent about receiving either $50,000 10 years from now or$35,000 today?
12 .
Vance Corporation had earnings last year of $3.25 per share. The company has experienced 8% annual growth over the last several years, and management expects that growth rate to continue. Based on this information, after how long will earnings per share double? 13 . What is the amount of total interest dollars earned on a$5,000 deposit earning 6% for 20 years?
14 .
You have decided that you will sell your $300,000 house when it appreciates in value to$500,000. If houses are appreciating at an average annual rate of 5% in your neighborhood, for approximately how long will you be staying in your house?
15 .
You just won some money in the lottery and would like to save a portion of it so that you will have $50,000 to put a down payment on a house in five years. Your bank pays a 5% rate of interest. How much money will you have to set aside from the lottery winnings? 16 . Bauer Bookstore sells books before they are published. Today, they offered the book Journeys in Finance for$14.20, but the book will not be published for another two years. Upon publishing, the price of the book will be $24.00. What is the discount rate Bauer Bookstore is offering its customers for this book? 17 . One of your professional goals is to one day earn a six-figure salary ($100,000). You hope to accomplish this objective within the next 30 years. Salaries grow at 3.75% per year in your field of work. What beginning salary will you need in order to reach this 30-year goal?
18 .
How much will $25,000 grow to in five years at a 5% annual rate that is compounded quarterly? 19 . If Eisenberg Industries revenues have increased from$30 million to $90 million over a 10-year period, what has been their annual rate of growth? 20 . If you are scheduled to receive$4,000 six years from today and the discount rate is 8.5%, what is the present value of this payment?
21 .
If you were to open a savings account that earns 3% interest and is compounded quarterly, what would be the total amount in your account after 10 years if you made an opening deposit of $9,500? 22 . You are considering four possible options for your new savings account. You plan to deposit$13,000 and leave this amount in the account for 20 years with no additional deposits or withdrawals. All of these account options would earn 6% interest, but each one has a different compounding frequency, listed below. What would be the value of each account at the end of the 20-year period?
1. Annually
2. Semiannually
3. Quarterly
4. Monthly
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