# Time Value of Money

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Date Submitted: 11/17/2012 03:38 AM

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Question 1

0.5 out of 0.5 points

Suppose a U.S. treasury bond will pay \$2,500 five years from now. If the going interest rate on 5-year treasury bonds is 4.25%, how much is the bond worth today?

b. \$2,030.30

b. \$2,030.30

Question 2

0.5 out of 0.5 points

You have a chance to buy an annuity that pays \$2,500 at the end of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?

e. \$6,744.83

e. \$6,744.83

Question 3

0.5 out of 0.5 points

Suppose you have \$1,500 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures?

a. \$1,781.53

a. \$1,781.53

Question 4

0.5 out of 0.5 points

Suppose a State of New York bond will pay \$1,000 ten years from now. If the going interest rate on these 10-year bonds is 5.5%, how much is the bond worth today?

a. \$585.43

a. \$585.43

Question 5

0.5 out of 0.5 points

You want to buy a new ski boat 2 years from now, and you plan to save \$8,200 per year, beginning one year from today. You will deposit your savings in an account that pays 6.2% interest. How much will you have just after you make the 2nd deposit, 2 years from now?

c. \$16,908