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Chapter 4: Question (page 281)
You invest $3,000 for three years at 12 percent.
c. What is the value of your investment after three years?
Answer
The value of investment after three years is $4,214.78.
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List five different financial applications of the time value of money.
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Question: You need $28,974 at the end of 10 years, and your only investment outlet is an 8 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year.
a. What single payment could be made at the beginning of the first year to achieve this objective?
b. What amount could you pay at the end of each year annually for 10 years to achieve this same objective?
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