Question

Exercise 9-3

Margaret wants to buy a car when she graduates from Central University 5 years from now. She believes that she will need $29,300 to buy the car.

(a) Calculate how much money Margaret must put into her savings account today to have $29,300 in 5 years, assuming she can earn 10% compounded annually.

Amount $_________________ (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,975.)

(b) Calculate how much money Margaret must put into her savings account today to have $29,300 in 5 years, assuming she can earn 10% compounded semiannually.

Amount $___________________ (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,975.)

Answer 1

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