Homework Answers
This can solved by using simple Future Value Formula:
let present value be x.
Time Horizon is 21 years.
A
Future Value = Present Value(1+r)t
40000 = x (1+0.06)21
x = 40000/ 3.39956
x = $ 11766.23
B
40000 = x (1+0.08)21
x = 40000/5.0338
x =$ 7946.28
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