| Course | MT217 Finance |
|---|---|
| Unit | Unit 4 |
| Paper type | Time value problem set |
| Length | About 850 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT217 Unit 4
Six Equipment Questions in Today's Dollars: A Unit 4 Time Value Problem Set for a Machine Shop
[Student Name]
Purdue University Global
MT217: Finance
Unit 4 Time Value Problem Set
[Instructor Name]
[Date]
Calder Precision, its plans and every figure are composite and illustrative; the sources cited are real.
The Shop
Calder Precision is a composite twenty-two-person machine shop in Rockford, Illinois, that makes parts for agricultural equipment makers. Its owner is planning to replace two aging lathes, a surface grinder and a press over the next six years and wants to know how much to set aside and when. All six problems use annual compounding unless stated otherwise, and results are rounded to the cent.
Problem 1: Growing a Reserve
Calder deposits [$40,000] now at 5 percent and leaves it alone for four years, the expected life left on its oldest lathe. With FV = PV(1 + r)^n, the growth factor is 1.05 to the fourth power, or 1.215506, and 40,000 times 1.215506 gives [$48,620.25].
What it means: the reserve grows by about [$8,620] without any further deposits, enough to cover most of the tooling for a new lathe, but not the lathe itself.
Problem 2: Working Back From a Target
The owner wants [$85,000] in six years for a CNC lathe, and the account pays 4.5 percent. Rearranged as PV = FV / (1 + r)^n, the target of 85,000 is divided by 1.045 to the sixth power, or about 1.302260, gives [$65,271.14].
What it means: the shop would need to set aside about [$65,300] today to have the lathe money in six years, more than its current cash allows, so it may need to combine a smaller deposit with later contributions, which Unit 5 will price.
Problem 3: Finding the Rate
Five years ago the owner put [$30,000] into a fund that is now worth [$42,000]. Solving for the rate means finding the number that, compounded five times, turns 30,000 into 42,000. The ratio 42,000 over 30,000 is 1.4; its fifth root is about 1.0696, so the fund earned about 6.96 percent a year.
What it means: that return beat the 5 percent savings account in Problem 1, which suggests the owner could earn more on reserves if she accepts some fluctuation in value. Whether that trade is worth it depends on timing: money needed for a lathe in two years should not sit in an account that could fall in value just before the purchase.
Problem 4: Finding the Time
At 7 percent, how long will it take [$25,000] to grow to [$40,000]? Solving n = ln(FV / PV) / ln(1 + r) gives the time. The ratio is 1.6; its log is 0.4700, and the log of 1.07 is 0.0677, so the answer is about 6.95 years.
What it means: a reserve started now would be ready for the surface grinder in about seven years, a year later than the grinder's expected replacement date, so the shop either needs a larger deposit or a higher return.
Problem 5: Compounding More Often
A bank offers 8 percent compounded quarterly. The effective rate is (1 + 0.08/4) raised to the fourth power, less one. The quarterly rate is 2 percent, and 1.02 to the fourth power minus one is about 8.24 percent. Over three years, [$20,000] grows to 20,000 times 1.02 to the twelfth power, or [$25,364.84], compared with [$25,194.24] at 8 percent compounded once a year.
What it means: quarterly compounding adds about [$171] over three years on this amount. The difference is small, but comparing offers by their effective rate prevents the shop from choosing a lower-yielding account that advertises a higher nominal rate.
Two accounts that both say 8 percent can pay different amounts, so the shop should compare effective rates.
Problem 6: Now or Later
A buyer offers [$50,000] today for the shop's old press. Another offers [$62,000] in three years, when the shop no longer needs it. At an 8 percent opportunity cost, the later offer is worth 62,000 divided by 1.08 cubed, or about 1.259712, which gives [$49,217.60] today.
What it means: the later offer is worth about [$782] less in today's dollars, so the immediate sale is slightly better, before considering that the later buyer might not follow through. The comparison also ignores the press's use for three more years, which would favor waiting if the shop could keep earning from it.
Summary
Brigham and Houston (2019) describe time value of money as the foundation of financial decisions, because a dollar received at different times has different values. Fisher (1930) explained interest itself as the price people place on having resources now rather than later, which is exactly the trade the owner faces in Problem 6. For Calder, the six answers point in one direction: the reserve needs to start now and earn more than a basic savings rate if all four machines are to be replaced on schedule. Ross et al. (2022) note that small differences in rates compound into large differences over long periods, which is why Problems 3 and 5 matter as much as the larger sums.
References
Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Cengage.
Fisher, I. (1930). The theory of interest. Macmillan.
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2022). Fundamentals of corporate finance (13th ed.). McGraw-Hill.
The Purdue Global MT217 Unit 4 instructions
Unit 4 typically asks for a set of time value problems involving single sums: future value, present value, solving for the rate, solving for the number of periods, effective annual rates and comparisons of amounts received at different times. Most prompts want each problem laid out with the known values, the formula, the substitution and the answer, so a grader can follow the method. Calculator or spreadsheet work is usually allowed, but the setup still needs to appear. Carry factors to several decimal places and round only at the end, since early rounding compounds errors. Many sections reward a sentence after each answer explaining what it means for the decision, which turns practice into analysis. A short summary connecting the problems helps. The set usually runs four pages with the textbook in the reference list; keep the formatting consistent so each problem is easy to find.
How this MT217 Unit 4 example is built
The set introduces the shop and its replacement plans, then states that compounding is annual unless noted. Problem 1 grows a reserve with the future value formula and the 1.215506 factor. Problem 2 works back from a lathe price to today's deposit. Problem 3 solves for the rate on an old fund, and a margin note explains why each answer is tied to the next decision. Problem 4 solves for the years needed with logarithms. Problem 5 compares quarterly and annual compounding, and the highlighted line warns that two accounts both quoting 8 percent can pay different amounts. Problem 6 discounts a later offer for the press and adds the caveat that keeping the press has value too. A summary, citing Brigham and Houston and Fisher on the price of time, concludes that the reserve must start now and earn more than basic savings, with Ross and colleagues on small rate differences.
Where the points sit in the MT217 Unit 4 rubric
Time value problem sets are usually graded on correct setup, accurate results and clear presentation. Each problem should show which values are known and which formula applies, so the grader can award method credit even if a final figure is off. Factors carried to several decimals and rounding at the end prevent errors that look like method mistakes. Graders often reward a short interpretation after each answer, because it shows the student knows what the number is for. Solving for rate and time with rearranged formulas tests understanding beyond plugging in values. Effective annual rates are a common trap, so showing the conversion step earns credit. A summary that turns the answers into a recommendation adds analytical value. Formatting matters in a problem set, with numbered problems and consistent layout. The course text and any additional sources should be cited in APA 7.
MT217 Unit 4 help: mistakes that cost points
Problem sets often lose points when only final answers appear, with no formula or substitution. Another frequent mistake is rounding factors to two decimals, which can shift a result by hundreds of dollars. Some students mix up present and future value, discounting when they should compound. Others confuse the number of periods when compounding is quarterly or monthly. Effective rates are often skipped or computed incorrectly. Interpretation is frequently missing, so the set never says what the numbers mean. Watch the units, too: a rate per quarter must be paired with quarters, not years. If your section allows a financial calculator, write down the inputs you entered so the grader can see them. Send our writers your problem set and any business context the prompt provides, and they can help lay out each problem and explain what each answer means.
Get an MT217 Unit 4 example written to your instructions
Attach the Unit 4 problems exactly as assigned, the rubric, and any rule on calculators or spreadsheets. Each problem comes back laid out with givens, formula, substitution and result, factors carried to six decimals and one closing sentence on what the figure means. There is no fee for an initial sample, typically ready in 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT217 Unit 4 questions, answered
Can I use a financial calculator instead of the formula?
Most sections accept calculator work, but the formula usually still needs to appear so a grader can see the setup. The sample shows the formula and substitution for each problem and could add the calculator entries beneath as a check. If your instructor requires keystrokes or spreadsheet functions instead, the custom version follows that rule.
Why carry factors to six decimals?
Because rounding early compounds. A factor of 1.22 instead of 1.215506 changes a 40,000 dollar future value by almost 180 dollars, a gap a grader could easily read as a method error. Carrying full precision and rounding only the final answer keeps results consistent with calculators and answer keys, which is what graders usually compare against.
How is the rate solved in problem three?
By rearranging the future value formula: divide 42,000 by 30,000, take the fifth root of 1.4, and subtract one, giving 6.96 percent. The sample shows the rearrangement in symbols before entering numbers. Solving for time in problem four uses logarithms in the same way, dividing the log of 1.6 by the log of 1.07.
Where can I find a free MT217 Unit 4 sample paper?
This page contains a complete MT217 Unit 4 time value problem set for a machine shop. It solves six single-sum problems with formulas and substitutions, explains each answer for the shop's decisions and includes margin notes.
Why is the later offer for the press worth less than the earlier one?
Discounted at 8 percent for three years, $62,000 is worth about $49,217.60 today, about $782 less than the $50,000 offered now. Waiting also carries the risk that the later buyer does not follow through.