Question

Problem 4-25 Calculating Present Values (LO 2] You have decided that you want to be a millionaire when you retire in 44 years. a. If you can earn an annual return of 11.34 percent, how much do you have to invest today? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if you can earn an annual return of 5.67 percent? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Amount to invest b. Amount to invest

Answer 1

4-25
a.	Amount to invest	=-pv(rate,nper,pmt,fv)
		=$8,858.22
	Where,
	rate	=	11.34%
	nper	=	44
	pmt	=	0
	fv	=	$10,00,000
b.	Amount to invest	=-pv(rate,nper,pmt,fv)
		=$88,333.39
	Where,
	rate	=	5.67%
	nper	=	44
	pmt	=	0
	fv	=	$10,00,000
4-5
a)	Year	=nper(rate,pmt,pv,fv)
		=8.34 Years
	Where,
	rate	=	8%
	pmt	=	0
	pv	=	$(950.00)
	fv	=	$1,805.00
b)	Year	=nper(rate,pmt,pv,fv)
		= 8.76 Years
	Where,
	rate	=	6%
	pmt	=	0
	pv	=	$(2,641.00)
	fv	=	$4,400.00
c)	Year	=nper(rate,pmt,pv,fv)
		=23.42 Years
	Where,
	rate	=	11%
	pmt	=	0
	pv	=	$(34,205.00)
	fv	=	$3,94,120.00
d)	Year	=nper(rate,pmt,pv,fv)
		=11.28 Years
	Where,
	rate	=	18%
	pmt	=	0
	pv	=	$(33,900.00)
	fv	=	$2,19,380.00