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    Acc303 Homework 2

    Uploaded by

    Dian Anjani
    Candice Willis needs $150,000 in 21 years and will invest $30,000 today. To reach her goal amount at an annual interest rate, the document calculates that she must earn 7.965% annually. Mel needs $250,000 in 10 years and if he earns 11% interest by investing an amount at the end of each year, he must initially invest $88,046.12.

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    Acc303 Homework 2

    Uploaded by

    Dian Anjani
    117 views1 page
    Candice Willis needs $150,000 in 21 years and will invest $30,000 today. To reach her goal amount at an annual interest rate, the document calculates that she must earn 7.965% annually. Mel needs $250,000 in 10 years and if he earns 11% interest by investing an amount at the end of each year, he must initially invest $88,046.12.

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    Candice Willis needs $150,000 in 21 years and will invest $30,000 today. To reach her goal amount at an annual interest rate, the document calculates that she must earn 7.965% annually. Mel needs $250,000 in 10 years and if he earns 11% interest by investing an amount at the end of each year, he must initially invest $88,046.12.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    117 views1 page

    Acc303 Homework 2

    Uploaded by

    Dian Anjani
    Candice Willis needs $150,000 in 21 years and will invest $30,000 today. To reach her goal amount at an annual interest rate, the document calculates that she must earn 7.965% annually. Mel needs $250,000 in 10 years and if he earns 11% interest by investing an amount at the end of each year, he must initially invest $88,046.12.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 1

    Candice Willis will invest $30,000 today. She needs $150,000 in 21 years.

    What annual interest rate must


    she earn?

    Ans.

    Present Value (PV) = $ 30,000

    Future Value (FV)= $150,000

    Time = 21 years

    r=?

    FV = PVx(1+r)^n

    150000=30000 x (1+r)^21

    r = (150000/30000)^(1/21) -1

    r = 0.07965 or 7.965%

    Mel needs $250,000in 10 yrs. How much must he invest at the end of each year,at 11% interest?

    Present Value (PV) = ?

    Future Value (FV)= $150,000

    Time = 21 years

    r = 10 years

    FV = PVx(1+r)^n

    PV = FV/(1+r)^n

    PV = 250000/(1+0.11)^10

    PV = $88046.12

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