(calculating present value) What’s the present value of $5,000 to be received in 6 years? Your required rate of return is 8% a year.
(calculating the rate of return) A friend promises to pay you $1,200 three years from now if you loan him $1,000 today. What interest rate is your friend offering you?
(calculating the future value of an annuity) If you invest $500 a year for 20 years at 6% annual interest, how much will you have at the end of the 20th year?
(calculating the present value of an annuity) How much would you be willing to pay today for an investment that pays $800 a year at the end of the next 10 years? (Your required rate of return is 6% a year.)