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Warning: TT: undefined function: 32 FINA 210 – Introduction to Real Estate Professor Masters TVM (Time Value of Money) Exercises Calculate the present value of $1,276 received in 5 years using a 5% discount rate. Calculate the future value of $1,000 in 8 years using a 6% discount rate. If the future...

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FINA 210 – Introduction to Real Estate Professor Masters TVM (Time Value of Money) Exercises

1. Calculate the present value of $1,276.28 received in 5 years using a 5% discount rate. 2. Calculate the future value of $1,000 in 8 years using a 6% discount rate. 3. If the future value of $5,000 in 8 years is $7,500 what is the discount rate? 4. If the present value of a future payment of $13,891.50, discounted at 5% is $12,000, in how many years will the payment be made? 5. Calculate the present value of $15,000 received in 7 years using a 6% discount rate. 6. Calculate the future value of $12,000 in 15 years using a 3% discount rate. 7. If the future value of $5,978.06 in 5 years is $8,000 what is the discount rate? 8. If the present value is $99,000, the future value is $166,032.91 and the discount rate is 9%, calculate N. 9. Calculate the present value of $15,000 received in 3 years using a 10% discount rate. 10. Calculate the future value of $11,000 in 4 years using a 7.5% discount rate. 11. If the future value of $25,000 in 10 years is $46,928.44 what is the discount rate? 12. If the present value of a future payment of $75,000, discounted at 5% is $55,966.15, in how many years will the payment be made? 13. Using a discount rate of 10%, which has a greater PV, $5,000 today, $8,300 in 5 years or $14,000 in 10 years? 14. Calculate the present value of $1,050 received in 6 months using a discount rate of 10% per year. 15. Calculate the future value of $1,000 in 8 years using a discount rate of 6% per year compounded semi-annually. 16. If the future value of $5,000 in 8 years is $7,500 what is the annual discount rate if interest is compounded monthly?

17. Calculate the present value of $19,000 received in 3 years using a discount rate of 8% per year compounded semi-annually. 18. Calculate the present value of $9,000 received in 3 years using a discount rate of 12% per year compounded monthly. 19. Using a discount rate of 5% compounded semi-annually, which has the highest present value: $10,000 today, 12,000 in 5 years or $17,000 in 10 years? 20. What is the present value of 5 years of monthly payments of $5,000 assuming a discount rate of 10% and payments at the end of the month? 21. What is the present value of the rental payments that will be made in a 3-year gross rent lease paying $5,000 per month assuming a discount rate of 10% and payments at the end of the month? 22. What is the present value of the rental payments that will be made in a 5-year gross rent lease paying $15,000 per month assuming a discount rate of 8% and end of month payments?

FINA 210 – Introduction to Real Estate Professor Masters TVM (Time Value of Money) Exercises – THE SOLUTIONS 1. Calculate the present value of $1,276.28 received in 5 years using a 5% discount rate. $1,000 (FV=-1276.28, N=5, I/Y=5, P/Y=1, C/Y=1, CPT PV=1000) 2. Calculate the future value of $1,000 in 8 years using a 6% discount rate. $1,593.85 (PV=1000, N=8, I/Y=6, P/Y=1, C/Y=1, CPT FV=1,593.85) 3. If the future value of $5,000 in 8 years is $7,500 what is the discount rate? 5.2% (N=8, PV=5000, FV=-7500, P/Y=1, C/Y=1, CPT I/Y=5.2) 4. If the present value of a future payment of $13,891.50, discounted at 5% is $12,000, in how many years will the payment be made? 3 (FV=-13891.50, PV=12000, I/Y=5, P/Y=1, C/Y=1, CPT N=3) 5. Calculate the present value of $15,000 received in 7 years using a 6% discount rate. $9,975.85 (FV=-15000, N=7, I/Y=6) 6. Calculate the future value of $12,000 in 15 years using a 3% discount rate. $18,695.61 (PV=12000, N=15, I/Y=3, P/Y=1, C/Y=1, CPT FV=-18695.61) 7. If the future value of $5,978.06 in 5 years is $8,000 what is the discount rate? 6% (FV=-8000, PV=5978.06, N=5, P/Y=1, C/Y=1, CPT I/Y=6) 8. If the present value is $99,000, the future value is $166,032.91 and the discount rate is 9%, calculate N. 6 (PV=99000, FV=-166032.91, I/Y=9, P/Y=1, C/Y=1, CPT N=6) 9. Calculate the present value of $15,000 received in 3 years using a 10% discount rate. $11,269.72 (FV=-15000, N=3, I/Y=10, P/Y=1, C/Y=1, CPT PV=11269.72) 10. Calculate the future value of $11,000 in 4 years using a 7.5% discount rate. $14,690.16 (PV=-11000, N=4, I/Y=7.5, P/Y=1, C/Y=1, CPT FV=-14690.16) 11. If the future value of $25,000 in 10 years is $46,928.44 what is the discount rate? 6.5% (PV=25000, FV=-46928.44, N=10, P/Y=1, C/Y=1, CPT I/Y=6.5) 12. If the present value of a future payment of $75,000, discounted at 5% is $55,966.15, in how many years will the payment be made? 6 (FV=-75000, PV=55966.15, I/Y=5, P/Y=1, C/Y=1, CPT N=6)

13. Using a discount rate of 10%, which has a greater PV, $5,000 today, $8,300 in 5 years or $14,000 in 10 years? $5,000 $5,153.64 $5,397.61 14. Calculate the present value of $1,050 received in 6 months using a discount rate of 10% per year. $1000 (FV=-1050, N=1, I/Y=10/2=5, P/Y=1, C/Y=1, CPT PV=1000) 15. Calculate the future value of $1,000 in 8 years using a discount rate of 6% per year compounded semi-annually. $1,604.71 (FV=-1000, N=8*2=16, I/Y=6/2=3, P/Y=1, C/Y=1, CPT FV=1604.71) 16. If the future value of $5,000 in 8 years is $7,500 what is the annual discount rate if interest is compounded monthly? 0.42325 * 12 = 5.08% (N=8*12=96, FV=-7500, PV=5000, P/Y=1, C/Y=1, CPT I/Y=0.42325) 17. Calculate the present value of $19,000 received in 3 years using a discount rate of 8% per year compounded semi-annually. $15,015.98 (FV=-19000, N=3*2=6, I/Y=8/2=4, P/Y=1, C/Y=1, CPT PV=15015.98) 18. Calculate the present value of $9,000 received in 3 years using a discount rate of 12% per year compounded monthly. $6,290.32 (FV=-9000, N=3*12=36, I/Y=12/12=1, P/Y=1, C/Y=1, CPT PV=6290.32) 19. Using a discount rate of 5% compounded semi-annually, which has the highest present value: $10,000 today, 12,000 in 5 years or $17,000 in 10 years? $10,000 $9,374.38 $10,374.60 20. What is the present value of 5 years of monthly payments of $5,000 assuming a discount rate of 10% and payments at the end of the month? $235,326.84 (N=5*12=60, PMT=-5000, I/Y=10/12=.8333, PV=0, FV=0, P/Y=1, C/Y=1, CPT PV=235326.84) 21. What is the present value of the rental payments that will be made in a 3 year gross rent lease paying $5,000 per month assuming a discount rate of 10% and payments at the end of the month? $154,956.18 (N=3*12=36, I/Y=10/12=.83333, PMT=-5000, FV=0, P/Y=1, C/Y=1, CPT PV=154956.18) 22. What is the present value of the rental payments that will be made in a 5 year gross rent lease paying $15,000 per month assuming a discount rate of 8% and end of month payments? $739,776.50 (PMT=-15000, N=5*12=60, I/Y=8/12=.66667, FV=0, P/Y=1, C/Y=1, CPT PV=739779.50)...