Question 1

What amount invested today would grow to $10,000 after 25 years if the investment earns: a. 8% compounded annually? b. 8% compounded semiannually?
c. 8% compounded quarterly?
d. 8% compounded monthly?

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Question 2

If money is worth 6% compounded annually, what amount today is equivalent to $10,000 paid
a. 12 years from now? 
b. 24 years from now? 
c. 36 years from now?

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Question 3

What is the present value of $10,000 discounted at 4.5% compounded annually over ten years?

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Question 4

What principal amount will have a maturity value of $5437.52 after 27 months if it earns 8.5% compounded quarterly?

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Question 5

The maturity value of an investment after 42 months is $9704.61. What was the original investment if it earned 7.5% compounded semiannually?

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Question 6

What amount today is economically equivalent to $8000 paid 18 months from now if money is worth 5% compounded monthly?

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Question 7

You owe $6000 payable three years from now. What alternative amount should your creditor be willing to accept today if she can earn 4.2% compounded monthly on a low-risk investment?

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Question 8

What amount, 1½ years from now, is equivalent to $7000 due in 8 years if money can earn 6.2% compounded semiannually?

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Question 9

A payment of $1300 is scheduled for a date 3½ years from now. What would be an equivalent payment 9 months from now if money is worth 5.5% compounded quarterly?

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Question 10

What single amount, paid three years from now, would be economically equivalent to the combination of $1400 due today and $1800 due in five years if funds can be invested to earn 6% compounded quarterly?

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Question 11

Ramon wishes to replace payments of $900 due today and $500 due in 22 months by a single equivalent payment 18 months from now? If money is worth 5% compounded monthly, what should that payment be?

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Question 12

Mohinder has financial obligations of $1000 due in 3½ years and $2000 due in 5½ years. He wishes to settle the obligations sooner with a single payment one year from now. If money is worth 7.75% compounded semiannually, what amount should the payee be willing to accept?

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Question 13

What payment 2¼ years from now would be a fair substitute for the combination of $1500 due (but not paid) 9 months ago and $2500 due in 4½ years, if money can earn 9% compounded quarterly?

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Question 14

A scheduled payment stream consisted of three payments: $2100 due (but not paid) 1½ years ago, $1300 due today, and $800 due in 2 years. What single payment, 6 months from now, would be economically equivalent to the payment stream?

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Question 15

A debtor owing payments of $750 due today, $1000 due in 2 years, and $1250 due in 4 years requests a payout figure to settle all three obligations by means of a single economically-equivalent payment 18 months from now. What is that amount if the payee can earn 9.5% compounded semiannually?

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Question 16

A bond pays $1000 interest at the end of every year for the next 30 years. What is the current economic value of each of the 15^th and 30^th payments if we discount the payments at: a) 5% compounded semiannually? b) 8% compounded semiannually?

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Question 17

A $15,000 loan at 11.5% compounded semiannually is advanced today. Two payments of $4000 are to be made 1 year and 3 years from now. The balance is to be paid in 5 years. What will the third payment be?

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Question 18

A $4000 loan at 10% compounded monthly is to be repaid by three equal payments due 5, 10, and 15 months from the date of the loan. What is the size of the payments?

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Question 19

A $6000 loan at 9% compounded quarterly is to be settled by two payments. The first payment is due after 9 months and the second payment, half the amount of the first payment, is due after 1½ years. Determine the size of each payment.

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Question 20

Teresita has three financial obligations to the same person: $2700 due in 1 year, $1900 due in 1½ years, and $1100 due in 3 years. She wishes to settle the obligations with a single payment in 2¼ years, when her inheritance will be released from her mother's estate. What amount should the creditor accept if money can earn 9% compounded monthly from the date nine months ago when the obligations were incurred?

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Quiz 8: Compound Interest: Future Value and Present Value

What amount invested today would grow to $10,000 after 25 years if the investment earns: a. 8% compounded annually? b. 8% compounded semiannually? c. 8% compounded quarterly? d. 8% compounded monthly?

If money is worth 6% compounded annually, what amount today is equivalent to $10,000 paid a. 12 years from now? b. 24 years from now? c. 36 years from now?