Time Value of Money

If you invest $1,000 today at an interest rate of 5% for 3 years, what is the future value?

• 1,100

• 1,157

• 1,120

• 1,230

How do you calculate the present value of $1,500 to be received in 4 years at an interest rate of 6%?

• 1,157

• 1,120

• 1,188

• 1,200

If you need to have $25,000 in 6 years, how much should you invest today at an interest rate of 4%?

• 18,700

• 20,000

• 19,890

• 19,757

You plan to set up an education fund for your child, who will begin college in 12 years. You want the fund to be worth $1,000,000 when your child starts college. If the expected interest rate is 4% annually, how much should you deposit today to reach your goal of $1,000,000 in 12 years?

• 624,597

• 600,000

• 620,000

• 590,000

You are saving for retirement and plan to invest $40,000 today in a retirement account that earns an annual interest rate of 7%. How much will your investment be worth in 30 years?

• 300,000

• 304,490

• 250,220

• 310,100