| Course | FIN-3010 Principles of Finance |
|---|---|
| Module | Module 1 |
| Paper type | Written assignment 1: time value of money |
| Length | About 712 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Bachelor of Science in Business Administration |
| Updated | October 2026 |
Free sample paper for FIN 3010 Module 1
Six Time Value of Money Problems From One Household's Decisions: Saving, Borrowing and Paying Down a Card
Student Name
Bachelor of Science in Business Administration, Thomas Edison State University
FIN-3010: Principles of Finance
Mentor Name
Month Day, Year
Six Time Value of Money Problems From One Household's Decisions: Saving, Borrowing and Paying Down a Card
The FIN-3010 syllabus asks students to work assigned textbook exercises and show all work. Because the textbook's problems are its own, the problems below are original exercises of the same kinds, set in one composite household: a 28-year-old dental hygienist in Edison, New Jersey, earning $78,000 a year. Each problem states the given values, the formula, the calculation and a one-sentence interpretation. Answers are rounded to the nearest cent or whole dollar as appropriate (Mayo & Lavelle, 2024).
Problem 1: Future Value of an Annuity
She contributes $350 a month to her employer's 401(k) plan and expects a 7% annual return, compounded monthly, until she retires at 65, which is 37 years or 444 months away. How much will the account hold?
| Step | Work |
|---|---|
| Given | PMT = $350; r = 0.07 / 12 = 0.0058333; n = 444 |
| Formula | FV = PMT x [((1 + r)^n minus 1) / r] |
| Calculation | (1.0058333)^444 = 13.2298; (13.2298 minus 1) / 0.0058333 = 2,096.5; 2,096.5 x $350 |
| Answer | About $733,791 |
Her own contributions total only $155,400 ($350 times 444); the rest, about $578,000, is compound growth, which is why starting at 28 rather than 38 makes such a difference.
Problem 2: Present Value of a Lump Sum
An aunt promises her $25,000 in ten years. If she could otherwise earn 5% a year, what is the promise worth today?
| Step | Work |
|---|---|
| Formula | PV = FV / (1 + r)^n |
| Calculation | $25,000 / (1.05)^10 = $25,000 / 1.62889 |
| Answer | $15,347.83 |
Problem 3: Loan Payment
She plans to finance a $24,000 car over 60 months at 6.5% annual interest. What is the monthly payment, and how much interest will she pay?
| Step | Work |
|---|---|
| Given | PV = $24,000; r = 0.065 / 12 = 0.0054167; n = 60 |
| Formula | PMT = PV x r / [1 minus (1 + r)^-n] |
| Calculation | (1.0054167)^-60 = 0.72316; 1 minus 0.72316 = 0.27684; $24,000 x 0.0054167 / 0.27684 |
| Answer | $469.59 per month; total interest = $469.59 x 60 minus $24,000 = $4,175.25 |
Problem 4: Effective Annual Rate
Her credit card charges a 22.99% annual percentage rate, compounded monthly. What is the effective annual rate?
| Step | Work |
|---|---|
| Formula | EAR = (1 + APR / m)^m minus 1 |
| Calculation | (1 + 0.2299 / 12)^12 minus 1 = (1.019158)^12 minus 1 |
| Answer | 25.57% |
Problem 5: The Cost of a Minimum-Style Payment
She carries a $4,800 balance on that card and pays a fixed $120 a month with no new charges. How long will it take to pay off, and how much interest will she pay?
| Step | Work |
|---|---|
| Formula | n = minus ln(1 minus B x r / PMT) / ln(1 + r) |
| Calculation | r = 0.019158; B x r / PMT = $4,800 x 0.019158 / $120 = 0.76633; ln(0.23367) = minus 1.4539; ln(1.019158) = 0.018977 |
| Answer | About 76.6 months, more than six years; total paid about $9,193, of which about $4,393 is interest |
Paying $120 a month on a card at almost 23% nearly doubles the cost of the original balance. Moving the balance to a lower-rate loan or raising the payment would save thousands of dollars.
Problem 6: Rule of 72
Roughly how long will it take money to double at 7%?
| Step | Work |
|---|---|
| Rule | Years to double = 72 / annual rate in percent |
| Calculation | 72 / 7 |
| Answer | About 10.3 years; the exact answer is ln 2 / ln 1.07 = 10.24 years |
Why These Calculations Matter
The arithmetic is simple, but people consistently misjudge it. Lusardi and Mitchell (2014) reviewed surveys across many countries and reported that roughly one American adult in three could answer three basic questions about interest, inflation and risk diversification correctly, and that financial literacy is associated with planning for retirement and managing debt well. Stango and Zinman (2009) found that many households underestimate how quickly balances grow under compounding, a tendency they called exponential growth bias, and that households with more of this bias borrowed more, saved less and held more of their wealth in short-term, high-cost debt. Problems 1 and 5 show both sides of that bias: compounding makes early saving powerful and long-carried debt expensive. Working the numbers, rather than estimating them, is the practical defense.
References
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5-44. https://doi.org/10.1257/jel.52.1.5
Mayo, H. B., & Lavelle, M. (2024). Basic finance: An introduction to financial institutions, investments, and management (13th ed.). Cengage Learning.
Stango, V., & Zinman, J. (2009). Exponential growth bias and household finance. The Journal of Finance, 64(6), 2807-2849. https://doi.org/10.1111/j.1540-6261.2009.01518.x
Reading the FIN 3010 Module 1 assignment instructions
According to the Online syllabus, FIN-3010 has seven written assignments made up of textbook exercises, worth 35% of the course grade together, and every answer must carry its textbook chapter and problem number along with a complete, step-by-step solution. Module 1 covers the time value of money, so expect future and present value problems for single amounts and annuities, loan payments and effective rates. A financial calculator or spreadsheet is allowed for the work, but write out the inputs and formula for each problem. The midterm, covering Modules 1 through 4, permits a calculator but not one on a phone. Set up a small spreadsheet early; you will reuse it for later modules.
How this FIN 3010 Module 1 example is built
The sample presents six problems in the order the topic usually builds, from future value of an annuity to the rule of 72, all set in one household so the results connect. Each problem uses a small table with the same rows, given values, formula, calculation and answer, so a mentor can follow every step and award partial credit. Short interpretation sentences follow the problems where the result has a lesson, such as how much of a retirement balance comes from growth. A closing paragraph uses two studies to explain why people misjudge compounding, tying the exercises to real financial decisions. The problems are original, written in the style of the textbook's chapter. The same layout in every problem makes the set easy to grade.
Reading the FIN 3010 Module 1 grading rubric
Written assignments in FIN-3010 are graded on correct answers and complete work. Full credit depends on the method being visible, so a bare final figure, however accurate, can lose points. Mentors therefore look for the inputs, the formula and the intermediate steps, not just a final number, and they often give partial credit when the method is right but arithmetic slips. Correct rounding and units, such as monthly versus annual rates, are frequent sources of lost points. Brief interpretation is not always required but shows understanding. Clear units, such as monthly versus annual rates, prevent the most common deductions.
Common FIN 3010 Module 1 mistakes, and how to avoid them
Most time value errors come from mismatched periods: using an annual rate with monthly payments, or months with an annual rate. Convert both to the same period before calculating. Another common mistake is confusing present and future value formulas, or the ordinary annuity with an annuity due. Students also lose points by writing only the calculator answer; record the inputs you entered. Check reasonableness: a present value should be smaller than the future amount when rates are positive. Keep at least four decimal places in intermediate steps. Our tutors can work through your assigned FIN 3010 Module 1 problems with you, step by step, showing all work. Keep a list of formulas beside you while working, and recheck each answer for reasonableness.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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FIN 3010 Module 1 questions, answered
Where can I find a free FIN 3010 Module 1 sample paper?
All six time value problems are solved on this page: six original problems with given values, formulas, calculations and answers, plus interpretation and research on why compounding is misjudged.
What does FIN-3010 require on written assignments?
The syllabus asks you to identify each textbook problem by chapter and number, show all work and give complete solutions to receive full credit.
How do I convert an annual rate to a monthly rate?
Divide the annual percentage rate by 12 when interest compounds monthly, and use the number of months as the number of periods.
What is the difference between APR and effective annual rate?
APR is the stated annual rate. The effective annual rate includes compounding within the year, so it is higher when interest compounds more than once a year.
Can I use a financial calculator for FIN-3010?
Yes. The syllabus allows a scientific, graphing or financial calculator on the midterm, but not a phone. On written assignments, show the inputs you used.