Newman Bogut just received a signing bonus of $949,100. His plan is to invest th
ID: 2813485 • Letter: N
Question
Newman Bogut just received a signing bonus of $949,100. His plan is to invest this payment in a fund that will earn 11%, compounded annually.
If Bogut plans to establish the AB Foundation once the fund grows to $3,685,621, how many years until he can establish the foundation?
Instead of investing the entire $949,100, Bogut invests $278,900 today and plans to make 13 equal annual investments into the fund beginning one year from today. What amount should the payments be if Bogut plans to establish the $3,685,621 foundation at the end of 13 years?
Explanation / Answer
1.
Using financial calculator BA II Plus - Input details:
#
FV = Future Value =
-$3,685,621.00
PV = Present Value =
$949,100.00
I/Y = Rate =
11.0000000
PMT = Payment or coupon or regular payment / frequency =
$0.00
CPT > N = Total number of periods in years =
13.00000
2.
Using financial calculator BA II Plus - Input details:
#
FV = Future Value =
-$3,685,621.00
PV = Present Value =
$278,900.00
I/Y = Rate / Frequency =
11.000000
N = Number of years x frequency =
13
CPT > PMT = Payment = Annual payment =
$99,290.79
Using financial calculator BA II Plus - Input details:
#
FV = Future Value =
-$3,685,621.00
PV = Present Value =
$949,100.00
I/Y = Rate =
11.0000000
PMT = Payment or coupon or regular payment / frequency =
$0.00
CPT > N = Total number of periods in years =
13.00000