Rahul and Miranda want to make a lump-sum investment for their newborn\'s colleg
ID: 2633168 • Letter: R
Question
Rahul and Miranda want to make a lump-sum investment for their newborn's college educator 'goal is to accumulate $80,000 in 18 years. What is the amount they must invest toda their goal if the annual rate of return is 8%? a. $20,020 b. $22,789 c. $14,782 d. $23,291 Troy wants to accumulate $40,000 in 10 years to purchase a vacation home. What is the ann investment rate of return that Troy must obtain if he deposits $250 at the end of every month 10 years? a. 6.75% b. 5.56% c. 9.25 % d. 7.75 % Samantha just won a settlement with an insurance company, which entitles her to receive payments of 820,000 at the beginning of each year for the next 20 years Her financial adv recommended to her that she consider accepting a lump-sum payment now, using a disco of 7%. What is the amount that she should accept in this scenario? a. $205,234 b. $211,880 c. $226,712 d, $182,765 Omar wants to make a gift of $10,000 in today's dollars to his parents at the end of each next 10 years. If the annual rate of return is 8% and inflation is 3%, what is the value of he must have in hand today to meet this need for the 10-year period?Explanation / Answer
1. 80000/1.18^8= $20019.9 or 20020
2. 250FVIFA(r,120)= 40000
FVIFA(r,120)= 160
r= .4633
therefore annual rate = .4633*12= 5.56%
3. PV= 20000+20000PVIFA(7%,19)= 226711.9 or 226712
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