Your brother needs $24,256 at the end of eight years, and his only investment ou
ID: 2697152 • Letter: Y
Question
Your brother needs $24,256 at the end of eight years, and his only investment outlet is a 9 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, he can make an initial investment at the beginning of the first year.
What single payment could be made at the beginning of the first year to achieve this objective? (Round "PV Factor" to 3 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)
Single payment made?
What amount could he pay at the end of each year annually for eight years to achieve this same objective? (Round "FV Factor" to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.)
Amount to be paid?
Your brother needs $24,256 at the end of eight years, and his only investment outlet is a 9 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, he can make an initial investment at the beginning of the first year.
Explanation / Answer
According to my calculations, if you expect to earn a 9.000% interest rate, compounded annually, you will need to deposit/invest $12,173.27 now in order for your investment to grow to $24,256.00 over the course of the next 8 years.
The following chart shows how $12,173.27 will grow to $24,256.00.
Year Interest Future Value Present Value $12,173.27 1 $1,095.59 $13,268.86 2 $1,194.20 $14,463.06 3 $1,301.68 $15,764.74 4 $1,418.83 $17,183.56 5 $1,546.52 $18,730.08 6 $1,685.71 $20,415.79 7 $1,837.42 $22,253.21 8 $2,002.79 $24,256.00 Totals $12,082.73 $24,256.00Related Questions
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