Question

1- How much money must you invest today in order to grow to a value of $100,000 in 30 years if your money grows at 5%?

2-A family spends $47000 in a year for living expenses. If prices increase 3% per year for the next 4 years, what amount will the family need for their living expenses for a year after 4 years?

Answer 1

Present value = Future value/(1+i)^n

i = interest rate per period

n= number of periods

1)

present value = 100000/(1+5%)^30

= 23137.75

2)

future value = 47000 * (1+3%)^4

= 52898.91