Problem

(L.OBJ. 3) Using the time value of money to compute the present and future values of sin...

(L.OBJ. 3) Using the time value of money to compute the present and future values of single lump sums and annuities [5—10 min]

Janet wants to take the next six years off work to travel around the world. She estimates her annual cash needs at $35,000 (if she needs more, she will work odd jobs). Janet believes she can invest her savings at 12% until she depletes her funds.

Requirements

1. How much money does Janet need now to find her travels?

2. After speaking with a number of banks, Janet learns she will only be able to invest her funds at 6%. How much does she need now to fund her travels?

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