8. Remember that trip to Tokyo for the 2020 Olympics? Let\'s assume I planned th

Question

8.  Remember that trip to Tokyo for the 2020 Olympics? Let's assume I planned things out way too conservatively. In seven years, a few of you will be successful attorneys, more of you will be making excellent use of graduate degrees, and many others likely are wildly successful in your chosen professional fields. Your work on estimating a "good time" in Tokyo suggests you need about $15,000 for two weeks.

Fortunately, your attention in F300 resulted in your being able to guarantee an 8% return on any money invested between now and the trip (seven years).

So how much money should you have saved for this trip is inflation runs at only 2% per year?

9. After more analysis, you determine that what you will need to have in the bank in 2020 is $18,500 (which is a future value unrelated to question Tokyo 01). Okay, how much money should you invest now (and only now), given your skills and talents, in order to be ready for Tokyo?

Explanation / Answer

8.

money needed in 2020 to enjoy a good time in tokyo = 15000*(1.02^7)=$17230.285

so money to be saved = 17230.285/(1.08^7)=$10053.706

9.

money to invest now = 18500/(1.08^7)=$10794.572

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