1. You invest $5,000 today at 6% annual interest.
What will be the future value after 5
years?
2. What will be the value of an investment of $10,000 after 3 years if the annual interest
rate is 8%?
3. Calculate the future value of $2,500 invested for 10 years at an annual interest rate of
5%.
4. What is the present value of $10,000 to be received after 7 years if the discount rate is
9% annually?
5. How much must be invested today to receive $15,000 after 4 years if the annual
discount rate is 6%?
6. You will receive $8,000 after 5 years. If the annual discount rate is 7%, what is the
present value?
7. You deposit $2,000 at the end of each year in an account earning 5% annually. What
will be the future value after 10 years?
8. You save $5,000 per year for 15 years in a retirement account that earns 7%
annually. What will be the accumulated amount?
9. If you deposit $3,000 each year for 6 years into a savings account earning 6% per
annum, how much will you have at the end of 6 years?
10. You are required to make annual payments of $1,200 for 5 years. If the discount rate
is 8% annually, what is the present value of this annuity?
11. You expect to receive $10,000 per year for 8 years from a rental property. If the
annual interest rate is 6%, what is the present value of this income stream?
12. A company promises to pay you $7,000 per year for the next 10 years. If the interest
rate is 9%, what is the value of this offer today?
13. You can either receive $10,000 today or $2,500 per year for 5 years. If the discount
rate is 6%, which option has a higher present value?
14. You are offered $15,000 today or $4,000 annually for 4 years.
If the annual discount rate is 7%, which option is financially better?
15. Option A: $18,000 lump sum today
Option B: $5,000 per year for 5 years
If the interest rate is 8% per annum, which option should you choose?
16. You can receive $12,000 today or $3,500 per year for 4 years.
At a discount rate of 6%, calculate the present value of both options and decide which
is preferable.
17. You are promised to receive $1,000 per year forever, starting one year from today.
If the discount rate is 8%, what is the present value of this perpetuity?
18. A charitable foundation is planning to make $5,000 annual donations forever to a
school.
If the school's required rate of return is 6%, what is the present value of the donation.
19. You are offered two options:
• Option A: Receive $3,000 per year forever
• Option B: Receive $3,000 per year for 25 years
If the discount rate is 6%, which option has a higher present value?
20. You are evaluating an investment opportunity that provides the following cash flows:
• Years 1 to 5: You will receive $3,000 per year (ordinary annuity).
• Year 8: You will receive a lump sum of $10,000.
The required rate of return (discount rate) is 8% annually.
21. You’re offered a retirement package with the following benefits:
A guaranteed annual pension of $20,000 for 5 years starting one year from now.
A lump sum of $50,000 at the end of Year 6.
The discount rate is 7%.
What is the present value of the package today?
22. You are evaluating a real estate investment that provides:
• Rental income of $12,000 per year for 4 years
• A property resale value of $100,000 in Year 5
If the required return is 6%,
