Fifteen years ago, Hailey invested $5,000 and locked in an annual interest rate of 6 percent...
Fifteen years ago, Hailey invested $5,000 and locked in an
annual interest rate of 6 percent for 30 years (ending 15 years
from now). Aidan can make a 15-year investment today and lock
in an interest rate of 8 percent.
How much money should he invest now in order to have the same
amount of money in 15 years as Hailey?
Homework Answers
AMount Required after 15 Years from Now = Hailey's amount
= CF * ( 1+r)^n
= $ 5,000 * ( 1+ 0.06)^ 30
= $ 5000 (1.06)^30
= $ 5000 * 5.7435
= 28717.46
AMount to be deposited by Aiden =
= CF ( 1+0.08) ^ 15
= CF ( 1.08)^15
= CF * 3.1722
28717.46 = CF * 3.1722
CF = 28717.46 / 3.1722
= $ 9052.94
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