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Discussion Board #3 Time Value of Money
Discussion Board #3 Time Value of Money
1. You currently owe $18,000 on a car loan at 8.0% interest. If you make monthly payments of
$576.49 per month, how long will it take you to repay the loan? Please state the time in
months.
Almost 36 Months
loan amount annual interest rate monthly payment monthly interest rate NPER
18000 0.08 -576.49 0.00666666667 35.1252463
2. You have received a bond that will pay $500 at the end of each year forever into the future.
If the market yield on the bond is 8.25%, how much it is worth today?
PV = C/R
So, the present value of the bond, which pays $500 annually forever at a market
yield of 8.25%, = $6,060.61.
3. What is the future equivalent of $1000 invested at 2% simple interest for 3 years?
FV = P×(1+rt)
FV = 1000 × (1+0.02×3)
FV = 1060
So, the future value of $1000 invested at 2% simple interest for 3 years is $1060.