As Executive Director of a NYC based education nonprofit agency, you are conside

Question

As Executive Director of a NYC based education nonprofit agency, you are considering purchasing a new van to transport teens that are part of the education and leadership clubs to various events across the tri-state area. You expect to buy the van for $50000 four years from today. A) If you can invest money at 5 percent compounded quarterly, how much you invest today? B) Suppose you can put aside only $37,500 today to buy the new van in 3 years, but think you can invest the money at 7.20% compounded monthly. Determine if you will have the $50,000 you will need for the new van. As Executive Director of a NYC based education nonprofit agency, you are considering purchasing a new van to transport teens that are part of the education and leadership clubs to various events across the tri-state area. You expect to buy the van for $50000 four years from today. A) If you can invest money at 5 percent compounded quarterly, how much you invest today? B) Suppose you can put aside only $37,500 today to buy the new van in 3 years, but think you can invest the money at 7.20% compounded monthly. Determine if you will have the $50,000 you will need for the new van. A) If you can invest money at 5 percent compounded quarterly, how much you invest today? B) Suppose you can put aside only $37,500 today to buy the new van in 3 years, but think you can invest the money at 7.20% compounded monthly. Determine if you will have the $50,000 you will need for the new van.

Explanation / Answer

A)

you invest today=50000/(1+(5%/4))^(4*4)

=40987.32

B)

value of  $37,500 after 3 years=37500*(1+(7.20%/12))^(3*12)=46511.31, so you will have less than 50000

the above are the answers

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