Question

Over the past several years, Catherine Lee has been able to save regularly. As a result, today she has $58,467 in savings and investments today. She wants to establish her own business in five years and feels she will need $100,000 to do so. Use the following table to answer the questions.

1. If she can earn 3% on her money, how much will her $58,467 in savings/investments be worth in five years? Round the answer to the nearest cent. Round FV-factor and FVA-factor to three decimal places.
   Calculate your answer based on the FV-factor.

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   Calculate your answer based on the financial calculator.

   $  

   
   Will Catherine have the $100,000 she needs?
   
   
   If not, how much more money will she need? Round the answer to the nearest cent. Round FV-factor and FVA-factor to three decimal places.
   Calculate your answer based on the FV-factor.

   $  

   
   Calculate your answer based on the financial calculator.

   $  

2. Given your answer to part a, how much will Catherine have to save each year over the next five years to accumulate the additional money? Assume she can earn interest at a rate of 3%. Round the answer to the nearest cent. Round FV-factor and FVA-factor to three decimal places.
   Calculate your answer based on the FVA-factor.

   $  

   
   Calculate your answer based on the financial calculator.

   $  

3. If Catherine can afford to save only $4,000 a year then, given your answer to part a, will she have the $100,000 she needs to start her own business in five years?
   

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

l Vo pravin mandora PV, HV, ANNUITY (Autosaved) - Excel AutoSave CH File Home 2 - Page Layout . 4x = ENG 01:59 - x Share Comments Insert Formulas Data Review View Help Search 11 A A = = Pusto Copy Wrap Text Merge & Center - General ES 0 % A - , 0.00 Insert Delete Format Conditional Format as Formatting Table Cell Styles Calibri Format Painter BIU- B Clipboard BK210 x fx BE BF Σ Αutakum ΑΤΟ- Sort & Find & Clear Filter Select Editing Font Alignment Number BG Вн ВІ В ВК BL BM BN BO 58467 CASE OF SIMPLE FUTURE VALUE PV RATE YEARS 3% 5 USING FV FACTOR FV = PV*(1+r)^n FV = 58467 X FVIF@3%, 5 YEARS 58467 X 1.159 67763.25 210 211 212 213 214 USING FINANCIAL CALCULATOR N =5 1/4 = 3 PV = -58467 PMT=0 FV = 67779.28 216 CPT 218 219 NO CAP SIKU VALUE SHE WILL NOT HAVE DESIRED AMOUNT PM, PMI | loan with points | LOCK BOX DILUTION --- pv, fv, annuity DOLLAR COSI AVG | EXPO NPER APR CPI ear FVA pva 52 53 STATE 56 # 57 58 ... Ready Circular References -- + -+ 40

Vo pravin mandora PV, HV, ANNUITY (Autosaved) - Excel 2 - Page Layout . 4x 3 ENG 0200 - x Share Comments Insert Formulas Data Review View Help Search AutoSave CH File Home X Out UD Copy A = = 11 O A A Wrap Text Merge & Center - General ES 0 % E , 0.00 Insert Delete Format Ideas Conditional Format as Formatting Table Styles Cell Styles Σ Αutakum ΑΤΟ- Sort & Find & Clear Filter Select Editing Calibri BIU-B Font x fx BF BG Alignment Clipboard BK220 BE Number BH BI B BK BL BM BN BO 32236.75 USING FV FACTOR SHORTFALL = 100000 - 67763.25 = USING FINANCIAL CALCULATOR SHORTFALL = 100000 - 67779.28 = 32220.72 b SAVE EACH YEAR USING FV FACTOR FV = PMT X FVIFA @3%, 5 YEARS 32236.75 = PMT X 5.309 PMT = 32236.75/5.309 PMT = 6072.09 *5.309 231 USING FINANCIAL CALCULATOR N=5 1/Y = 3 PV = 0 FV = - 32220.72 PMT = 6068.92 237 238 239 CPT --- pv, fv, annuity CAP SIKU VALUE PM, PMI | loan with points | LOCK BOX DILUTION DOLLAR COSI AVG | EXPO NPER APR CPI ear FVA pva 52 53 STATE 56 # 57 58 ... Ready Circular References -- + -+ 40

Vo pravin mandora PV, HV, ANNUITY (Autosaved) - Excel AutoSave CH File Home X Out 2 - Page Layout . 4x 3 ENG 0200 - x Share Comments Insert Formulas Data Review View Help Search A = = Peste Le Copy 11 O A A Wrap Text Merge & Center - General ES 0 % E , 0.00 Insert Delete Format Ideas Conditional Format as Formatting Table Cell Styles Σ Αutakum ΑΤΟ- Sort & Find & Clear Filter Select Editing Calibri BIU-B Font for BF BG Alignment Number Styles Clipboard BK259 BE 240 x BH ВІ В ВК BL BM BN BO 241 C NO 4000 PER YEAR WILL NOT BE ENOUGH TO REACH TO A GOAL OF 100000 [SEE ABOVE CALCULATION IN PART b] 243 245 247 257 258 259 --- pv, fv, annuity CAP SIKU VALUE PM, PMI | loan with points | LOCK BOX DILUTION DOLLAR COSI AVG | EXPO NPER APR CPI ear FVA pva 52 53 STATE 56 # 57 58 ... Ready Circular References -- + -+ 40