2. You want to buy a big boat when you retire. You anticipate needing $130,000 to...

Question

Question

business finance

Answer 1

Answer #1

PT a Investment = Present value of amount required in future

= Amount required in future/(1+r)ⁿ

r = rate of interest i.e. 5.1*3/12 i.e.1.275% compounded quarterly

n = period i.e.20*4 i.e. 80

Investment =130000/(1.01275)⁸⁰ i.e. 47180.57

PT b Future value =Present value *(1+r)ⁿ

= 47180.57(1.032906)⁸⁰ i.e.155255.35

Money left =Amount earned - Amount required

= 155255.35-130000 i.e.25255.35

PT c

Investment = Present value of amount required in future

= Amount required in future/(1+r)ⁿ

r = rate of interest i.e. 6*3/12 i.e.1.5% compounded quarterly

n = period i.e.20*4 i.e. 80

Investment =130000/(1.015)⁸⁰ i.e. 39505.72

Answer 2

Similar Homework Help Questions

1,You have decided that you when you retire 40 years from now, you want to buy...

1,You have decided that you when you retire 40 years from now, you want to buy a lodge in Northern Manitoba that you believe will cost $100,000 at that time. You have found an investment opportunity that will yield an interest rate of 7.5% annually, compounded annually. How much will you need to invest now to reach your goal? Multiple Choice $5,541.94 $6,426.89 $4,091.67 $8,832.02 2. All else equal, holding the interest ready steady, the further out a cash flow...
1. Hector's parents anticipate needing $80,000 when he is 18 for his college education. a. [4...

1. Hector's parents anticipate needing $80,000 when he is 18 for his college education. a. [4 pts]If he is 5 years old now, how much should they invest in an investment plan that pays 6.23% compounded quarterly? b. [2 pts]Hector ended up getting a full scholarship. His parents agreed to let him draw the interest off the investment account each quarter (3 months) for expenses. How much will Hector receive each quarter? 2. Meagan invests $1,200 each year in an...
You want to have $10 million dollars when you retire in 45 years. How much do you...

You want to have $10 million dollars when you retire in 45 years. How much do you have to invest each month if you can earn 13% annual return (compounded monthly) on your investment?

You would like to retire a millionaire! You plan on retiring in 40 years and using...

You would like to retire a millionaire! You plan on retiring in 40 years and using historical data you determine that a 5% interest rate compounded quarterly is a reasonable expectation. How much do you need to invest now to have $1000000 in 40 years. How much of The $ 1000000 that you have earned is interest?
3(a). You want to retire 50 years from now, and you want access to ten million dollars ($10,000,000) when you do. You de...

3(a). You want to retire 50 years from now, and you want access to ten million dollars ($10,000,000) when you do. You decide to put some money towards buying a certificate of deposit that’ll be worth 10 mil in 50 years. The CD has an annual interest rate of 8%, and it compounds quarterly. How much do you have to put into this deposit?3 (b). Let’s say you put an equal amount of money into a simple interest account with...
(1) You want to buy a new sports car from Muscle Motors for $68,000. The contract...

(1) You want to buy a new sports car from Muscle Motors for $68,000. The contract is in the form of a 72-month annuity due at an APR of 6.75 percent. What will your monthly payment be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Monthly payments: _____ (2) You're trying to save to buy a new $202,000 Ferrari. You have $52,000 today that can be invested at your bank. The bank pays...

You want to retire with $370 000 in the bank and you are able to earn...

You want to retire with $370 000 in the bank and you are able to earn 4.84% compounded quarterly for the next 25 years. You currently have $175 000 saved up. How much more do you have to invest in 15 years in order to achieve your goal? A) $100 649.58 B) $110 649.58 C) $120 649.58 D) $130 649.58 E) $0.00
2-3 You estimate you will need S1,200,000 to live comfortably when you retire. a. Assuming you...

2-3 You estimate you will need S1,200,000 to live comfortably when you retire. a. Assuming you will retire in 40 years, how much will you need to invest each year (in equal annual amounts) to reach your goal if your average annual return on investment is 10%? b. How much per year if your return is 2% per year?
You have decided that you want to be a millionaire when you retire in 45 years....

You have decided that you want to be a millionaire when you retire in 45 years. Requirement 1: If you can earn an annual return of 9 percent, how much do you have to invest today? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Investment $ Requirement 2: What if you can earn 4.5 percent? (Enter rounded answer as directed, but do not use rounded...

You plan to retire in 1212 years and buy a house in Oviedo, Florida. The house...

You plan to retire in 1212 years and buy a house in Oviedo, Florida. The house you are looking at currently costs $80 comma 00080,000 and is expected to increase in value each year at a rate of 66 percent. Assuming you can earn 1111 percent annually on your investments, how much must you invest at the end of each of the next 1212 years to be able to buy your dream home when you retire? Assuming you can earn...