Time value of money

Time value of money

1. 1. You will receive $2,000 in 7 years. The discount rate is 5%. What is the present value? Answer in dollars to the nearest cent.

   $

2. 2. You invest $10,000 today at 8% annual interest. What is its future value in 10 years? Answer in dollars to the nearest cent.

   $

3. 3. Using the Rule of 72, approximately how long does an investment earning 9% per year take to double?

   6 years8 years10 years12 years

4. 4. Which of the three rules of time travel forbids you to add $100 today to $100 in five years without first discounting or compounding?

   Rule 1: only same-date cash flows can be combinedRule 2: compound to move forward in timeRule 3: discount to move backward in timeThere is no such rule