TVM practice worksheet

Name: ______Date: ______

4. Bill is 20 years old and wants to retire at 65. He plans to invest in an annuity earning 7% annual interest compounded annually. He plans to save $150 from his monthly paycheck so he can make annual payments to his annuity. Use TVM to determine the future value of his investment.

Variable / Value in This Situation
N
I%
PV
PMT
FV
P/Y
C/Y

5. Bill decided he needed $750,000 for his retirement. Will his annuity plan provide the necessary funds for his retirement? If not, what could he do to increase the value of the investment at retirement (Be specific, give a list of options. Consider TVM.)? Of those actions, which does she have relative control over (discuss at least 2 options.)?

Variable / Value in This Situation
N
I%
PV
PMT
FV
P/Y
C/Y

6. Bill decides he should invest quarterly instead of annually using the same account and monthly savings from question 1. How much more will Bill save by investing quarterly.

Variable / Value in This Situation
N
I%
PV
PMT
FV
P/Y
C/Y

1. In Josephine’s initial situation, she plans to retire in 50 years with $1 million in savings.

Vanessa advised her to find an account that earned at least the current rate of inflation.

Use this information to complete the table below.

2. Hilda wants to have $10,000 in 10 years after investing in an account that earns 3.6% compounded monthly.

3. Juan wants to invest $1,250 in an account that earns 2.34% interest, compounded

monthly. How many years will it take for the account to have a value of $5,000?