Question

Problem 9: Calculating Present Values. You need $40,000 in nine years. If you can earn .22% per month, how much will you have to deposit today? | will have to deposit $ -, today. Problem 10: Calculating Present Values. You have decided that you want to be a millionaire when you retire in 32 years. 10a. If you can earn a 8% return, how much do you have to invest today? I have to invest $ today 10b. If you can earn an 10% return, how much do you have to invest today? I have to invest _, today.

Answer 1

The answer for above problem is explained below.

Calculation of present value PV = (It rate) $ 40,000 Pv= 9x12 Cit0.0022) $ 40,000 PV = 108 (1.0022 ) Pv= $40,000 1.26 787 PV = $ 31, 548.975 Bohet pvz FV (1+rale) $ 1,000,000 (1+0.08)32 $1,000,000 11. 73708

- Present value Cpv) - $ 85,200.06 ) Pue $1,000,000 (1+0.1)32 PV = $1,000,000 21.11377 Pv = $47, 362.44 Calculation of future value FV = Pv (lton FV = $ 17,000 (1+0.06) Fu = $17000 x 106894 FV = ($ 28, 721.14 Are - ca Calculation of Number of periods A = P(l+on $ 150,000 = $60,000 (1+0,06) »

$150,000 $60,000 - (1.06)" - 2.5 = (1006) Take Natural log on both sides - dog 25 = logo Chocyn 25 sn bg (106) log(2.5) log (1006) 0,39794 0.0253 2) n = 15.725 years . I will have to wait, 15.725 +2 years 117.725 years from now.