Case Application TIME VALUE OF MONEY Richard e-mailed that he and Monica differed about the impact of his extra spending over the past 15 years. He calculated it at about $3,000 a year. He said the total cost of $45,000 was well within his capability the makeup. Monica said the cost was much greater and asked that they compute it. They were offered and investment of $20,000 that would pay $70,000 in 20 years. They want to know if they should take it. Finally there is an annuity that Richard could sign up for at work. It would cost $100,000 at age 65 and provide payments of $8,000 per year over his expected 17-year life span. He want to know if it is attractive. The appropriate market rate of return on investments in 7 percent after tax. Case Applications
