10. TVM problems Check Your Understanding Your company currently has sales of $2

Question

10. TVM problems Check Your Understanding Your company currently has sales of $200,000, but you expect to have $500,000 in sales in five years. How much do you expect a Aa E sales to grow by each year? Growth rate = The city you live in currently has a population of 80,000. City planners have estimated that the population will grow at about 3% over the next 10 years. What is the city's expected population in 10 years? Population in 10 years = You currently have $3,400 in an investment account that returns 11% per year. How long will you have to wait until you can make a $5,000 down payment on a car? Years until you can make the down payment- A loan you took out is due in three years and requires repayment of $3,000. To pay off the loan, you set aside money in an account that pays 7% interest. In order to meet your obligation, how much money needs to be in the account right now? Money required today = Session

Explanation / Answer

a) growth rate = 500/000/200,000 - 1 = 150%

b) population in 10 years = 80,000*1.0310 = 107,513.31

c) 5000 = 3400*1.11n

years till down payment = 3.70 years

d) money required today = 3000/1.073 = 2,448.89

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