How much would you have to invest today to receive: Use Appendix B or Appendix D

Question

How much would you have to invest today to receive: Use Appendix B or Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

$15,000 in 10 years at 14 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

$19,500 in 20 years at 15 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

$7,900 each year for 19 years at 12 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

$54,000 each year for 50 years at 10 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

$15,000 in 10 years at 14 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Explanation / Answer

Future value = P×(1+r)^n

P is payment

r is interest rate per period

n is number of periods

a)

$15,000 = P×(1+14%)^10

Amount to be invested, P = $4,046.16

b)

$19,500 = P×(1+15%)^20

Amount to be invested, P = $1,191.46

Present value of annuity = P×[1-(1÷(1+r)^n))]÷r

r is interest rate per period

P is payment per period

n is number of payments

c)

= $7,900×[1-(1÷(1+12%)^19))]÷12%

= $59,189.63

d)

= $54,000×[1-(1÷(1+10%)^50))]÷10%

= $535,399.98

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