Please help complete the following and show all work. You are saving to buy a ho

Question

Please help complete the following and show all work. You are saving to buy a house and estimate that you will need $40,000 for a down payment in 5 years. If you feel confident that you can cam 7.5% per year on your money, how much do you need to invest today? An investment promises to pay S20.000 in 10 years if you invest $10,000 today. What is the implied rate of interest? An investment pays S5.000 per year for the next 10 years. If your discount rate is 7%, how much are you willing to pay for this investment today? You want to purchase a new car, and you are willing to pay $30,000. If you can invest at 5% per year and you currently have $15,000. how long will it be before you have enough money to pay cash for the car? Suppose you begin saving for your retirement by depositing $3,000 per year in an IRA. If the annual interest rate is 6.5%. how much will you have in 40 years? Suppose you invest $500 today in an account paying 2% interest per year. How much will you have in the account in 5 years?

Explanation / Answer

Future value = P×(1+r)^n

$40,000 = P×(1+7.5%)^5

Investment required, P = 27,862.3

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