# The Time Value of Money

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3. Time Value of Money II- tutorial questions (tutorial in week 4) |

1. You are in first year at university and are planning a trip to Vietnam when you graduate at the end of 4 years. You plan to save the following amounts annually, starting today: \$625, \$700, \$700 and \$750. If the account pays 5.75 per cent annually, how much will you have at the end of 4 years? 2. Stephanie Watson plans to adopt the following investment pattern beginning next year. She will invest \$3125 in each of the next 3 years and will then make investments of \$3650, \$3725, \$3875 and \$4000 over the following 4 years. If the investments are expected to earn 11.5 per cent annually, how much will she have at the end of the 7 years? 3. Arian Motavalli borrowed a certain amount from his friend and promised to repay him the amounts of \$1225, \$1350, \$1500, \$1600 and \$1600 over the next 5 years starting at the end of the first year. If the friend normally discounts investments at 8 per cent annually, how much did Arian borrow? 4. Dynamic Telecommunications Ltd has made an investment in another company that will guarantee it a cash flow of \$22 500 each year for the next 5 years. If the company uses a discount rate of 15 per cent on its investments, what is the present value of this investment? 5. Cecelia Yeung is a sales executive at a Brisbane company. She is 25 years old and plans to invest \$3000 every year in a retirement savings account, beginning at the end of this year until she turns 65 years old. If the retirement savings investment will earn 9.75 per cent annually, how much will she have in 40 years, when she turns 65 years old? If Cecelia Yeung invests at the beginning of each year, how much will she have at age 65? 6. The Bridge Bar & Grill has a 7-year loan of \$23 500 with Bankwest. It plans to repay the loan in 7 equal instalments starting today. If the rate...

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#### Time Value of Money

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#### Time Value of Money

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#### Time Value of Money

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