Question

cucu uron ruAL SCREEN PRINTER VERSİON 'BACK D Question 2 John Filmore's lifeliong dream is to own his own fishing boat to use in his retirement. John has recently come into an inhenitance of $408,600. He estimetes that the boat he wants well cost $330,300 when he retires in 4 years Assuming quarterly compounding of amounts invested at 12%, how much f Oh vested to have enough at etre ent to buy the boat? (Round factor vah es Fa eh he tance must be decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581) Investment amount Click if you would like to Show work for this question: Open Show Work By accessing this Question Assistance, you will leam whilte you eam ponts based on the Point Potential Polcy set by your inatructor

Answer 1

FV = P x FVIF (r, n)

FV = Future value of investment = $ 330,300

P = Initial investment

r = Rate of investment = 12 % p.a. or 12 %/4 = 3 % p. q.

n = Number of periods = 4 years x 4 quarters = 16 periods

$ 330,300 = P x PVIF (3 %, 16)

$ 330,300 = P x 1.60471

P = $ 330,300 / 1.60471

    = $ 205,831.58327673 or $ 205,832

$ 205,832 of John Fillmore’s inheritance should be invested to have enough at retirement to buy the boat.