Styles Since attending college at SAU and taking the Personal Finance course, Jo
ID: 2817519 • Letter: S
Question
Styles Since attending college at SAU and taking the Personal Finance course, Jodie has been saving regularly and has accumulated $20,000 in savings and investments Jodie wants to open up her own business in 3 more years. She thinks she will need $35,000 to do so. 9. If you wish to accumulate $150,000 in 10 years, how much must you deposit today in an account that pays an annual interest rate of 12%? 10. Find the present value of $5,000 to be received 6 years from today if the interest rate is 5% LGExplanation / Answer
An answer to Question No. 9
This question seems to be one-time deposit in a bank account.
after 10 years you wish to accumulate $150000. Annual interest rate = 12%
so we have all variables means t (time) = 10 years, Compounding interest value = $150000, r (annual interest rate) = 12%
C.I. = Principal*(1+r)^n
150000 = Q*(1+0.12)^10
Q = 150000/((1.12)^10)
= 150000/3.105848
= 48295.99
Please check with your answer and let me know.
An Answer to Question No. 10
This question is a part of present value of time.
$1 of current is more powerful than $1 of future,(powerful means you can purchase more).
the present value of $ 5000 six years from today @ 5% = 5000*PVIF(5%,6)
= 5000*0.746215
= 3731.077
Please check with your answer and let me know.