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Time Value of Money Problems 
FIN-643 Managerial Finance 
 
1. You have $10,000. You expect to earn 8% interest on this money. How 
much will this money be worth in 25 years? ___$68484.75____________ 
 
 
2. You wish to go on vacation in 5 years. You think the vacation will cost 
$15,000 in today's dollars, and inflation will cause it to increase by 9% per 
year. How much will you need today to fund this investment if you could 
earn 7% on the funds? ____$16455.26___________ 
 
 
3. You wish to go on vacation in 5 years. You think the vacation will cost 
$15,000 in today's dollars, and inflation will cause it to increase by 9% per 
year. Assume you have $0 today, and you wish to invest monthly for this. 
How much will you need to invest monthly if you could get 7% on the 
money? _____$320.50__________ 
 
 
4. You wish to go on a cruise when you can afford it. You plan on this cruise 
costing a total of $5,000. You plan on putting away $100 per month at 7% 
interest. How many months will it be before you will be able to go on 
vacation? _____44 months__________ 
 
 
5. Someone has just offered you the investment of a lifetime.

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