Time Value of Money (TVM)

Business & Finance
Tutor: None Selected Time limit: 1 Day

Provide a story problem that can be solved using one or more TVM calculations.

Mar 8th, 2015

John is 35 years of age. John wants to create a fund which will be $1,000,000 at the end of 30 years. He plans  to make equal annual payments for 30 years the payment is due after one year. The rate of interest is 7%. What must be the annual payments? 

Mar 8th, 2015

What are some of the assumptions behind the TVM calculations? How do these assumptions limit our application of these calculations?

Mar 8th, 2015

The assumption is that reinvestment also will earn the same rate of interest.

Suppose we have $1000 and rate =10% 

It is worth $1100 at the end of the year.

1100 at one year end is equivalent to 1000 now.

We do not take inflation into account

Mar 8th, 2015

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Mar 8th, 2015
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Mar 8th, 2015
Dec 10th, 2016
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