# Single Cash Flow

## Part 1 – Single Cash Flow

 BUS-FPX3062 Assessment 2 Template Part 1: Time Value of Money Single Cash Flow Solve the following problems and answer the last question. Example problems can be found on the “Example – Single Cash Flow” tab below. Create an appropriate (TVM) formula using the supplied values in the appropriate cell so Excel can calculate the answer. Calculations 1. How much would be in your savings account in 11 years after depositing \$150 today, if the bank pays 7% per year? [Answer here] 2. A deposit of \$350 earns the following interest rates: (a) 8% in the first year, (b) 6 in the second year, and (c) 5.5 in the third year. What would be the third year future value? [Answer here] 3. Compute the present value of an \$850 payment made in 10 years when the discount rate is 12%. [Answer here] 4. What annual rate of return is earned on a \$5,000 investment when it grows to \$9,500 in five years? [Answer here] 5. What is the rate of interest if your money doubles every 6 years? This is also known as Rule of 72. [Answer here] Question 6. Given the same annual interest rate, would you rather have a savings account that paid interest compounded on a monthly basis, or one that compounded interest on an annual basis? Perform the calculation to support your answer. [Answer here]

## Part 2 – Annuity Cash Flows

 Part 2: Time Value of Money Annuity Cash Flows Solve the following problems and answer the last question. Example problems can be found on the “Example – Annuity Cash Flow” tab. Create an appropriate (TVM) formula using the supplied values in the appropriate cell so Excel can calculate the answer. Calculations 1. What is the future value of a \$1,000 annuity payment over five years if interest rates are 9%? [Write the formula here] [Answer here] 2. What is the present value of a \$800 annuity payment over six years if interest rates are 10%? [Write the formula here] [Answer here] 3. Assume you purchased a house on January 1, 2020 for \$200,000. You had made a down payment of 20% on the house and the balance was financed with a 30 year loan at 5% per annum stated APR with monthly payments to be made beginning January 1, 2020. What are your monthly payments? [Write the formula here] [Answer here] 4. Judith has just become eligible to participate in her company’s retirement plan. Her company does not match contributions, but the plan does average an annual return of 12%. Judith is 40 and plans to work to age 65. If she contributes \$200 per month, how much will she have in her retirement plan at retirement? [Write the formula here] [Answer here] 5. How much do you have to deposit today so that exactly 10 years from now you can withdraw \$10,000 a year for the next five years? Assume an interest rate of 6%. [Write the formula here] [Answer here] Question Imagine that a friend tells you that you should not rush to pay off your mortgage early because you will lose out on the interest tax deductions you are getting. Discuss the role of amortization of mortgages in your analysis of the issue. [Answer here]