a.
PV = FV/(1+r) n
PV = Present value
FV = Future value = $ 2,300,000
r = Rate of return = 0.05 p.a.
n = Number of periods = 28
PV = $ 2,300,000/ (1 + 0.05)28
= $ 2,300,000/ (1.05)28
= $ 2,300,000/ 3.92012913845865
= $ 586,715.365429092 or $ 586,715.37
Sarah needs to invest $ 586,715.37 today to achieve the goal.
b.
r = 0.16 p.a.,
n = log (FV/PV)/log (1+r)
= log ($ 2,300,000/$ 586,715.37)/log (1+0.16)
= log 3.92012910791821/log 1.16
= 0.59330037057/0.064457989227
= 9.20445049 or 9.20 years
Sarah could retire in 9.20 years
(Related to Checkpoint 5.4) (Present value) Sarah Wiggum would like to make a single investment and...
(Related to Checkpoint 5.4) (Present value) Sarah Wiggum would like to make a single investment and have $1.6 million at the time of her retirement in 32 years. She has found a mutual fund that will earn 6 percent annually. How much will Sarah have to invest today? If Sarah earned an annual return of 14 percent, how soon could she then retire? (Round to a. If Sarah can earn 6 percent annually for the next 32 years, the amount...
(Present value) Sarah Wiggum would like to make a single investment and have $2.3 million at the time of her retirement in 26 years. She has found a mutual fund that will earn 7 percent annually. How much will Sarah have to invest today? a. If Sarah can earn 7 percent annually for the next 26 years, the amount of money she will have to invest today is If Sarah earned an annual return of 17 percent, how soon could...
Sarah Wiggum would like to make a single investment and have $1.8 million at the time of her retirement in 35years. She has found a mutual fund that will earn 7 percent annually. How much will Sarah have to invest today? If Sarah earned an annual return of 14 percent, how soon could she then retire? a. If Sarah can earn 7 percent annually for the next 35 years, the amount of money she will have to invest today is...
Sarah Wiggum would like to make a single investment and have 2.1 million at the time of her retirement in 35 years. She has found a mutual fund that will earn her 7 percent annually. How much will Sarah have to invest today? If Sarah earned an annual return of 14 percent. How soon could she retire? A If Sarah can earn 7 percent annually for the next 35 years, the amount of money she will have to invest today...
Sarah Wiggum would like to make a single investment and have $2.7 million at the time of her retirement in 25 years. She has found a mutual fund that will earn 6 percent annually. How much will Sarah have to invest today? If Sarah invests that amount and could earn a 14 percent annual return, how soon could she retire, assuming she is still going to retire when she has $2.7 million?
(Related to Checkpoint 5.4) (Present value) Sarah Wiggum would like to make a single investment and have $2.0 million at the time of her retirement in 35 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah have to invest today? If Sarah earned an annual return of 14 percent, how soon could she then retire?
Q:2 Sarah would like to make a single investment and have $2,000,000 at the time of her retirement in 35 years. She has found a mutual fund that will earn 4% annually. How much will Sarah have to invest today? If Annual Percentage Rate (APR) is 10%, calculate the effective Annual Rate (EAR) when interest rate is compounded i. Monthly ii. Continuously (4+4 = 8 marks)
22) Maria would like to make a single investment and have $1 million at the time of her retirement in 20 years. She has found a mutual fund that will earn 6 percent annually. How much will Maria have to invest today? (6p)
(Related to Checkpoint 5.4) (Present-value comparison) You are offered $100,000 today or $340,000 in 14 years. Assuming that you can earn 16 percent on your money, which should you choose?If you are offered $340,000 in 14 years and you can earn 16 percent on your money, what is the present value of $340,000? $nothing (Round to the nearest cent.) (Related to Checkpoint 5.4) (Present-value comparison) You are offered
(Related to Checkpoint 5.4) (Present-value comparison) You are offered $110,000 today or $360,000 in 14 years. Assuming that you can earn 12 percent on your money, which should you choose? If you are offered $360,000 in 14 years and you can earn 12 percent on your money, what is the present value of $360,000? (Round to the nearest cent.)