?Sarah Wiggum would like to make a single? lump-sum investment and have ?$2.32.3
ID: 2827431 • Letter: #
Question
?Sarah Wiggum would like to make a single? lump-sum investment and have
?$2.32.3
million at the time of her retirement in
2828
years. She has found a mutual fund that expects to earn
55
percent annually. How much must Sarah invest? today? If Sarah earned an annual return of
1414
?percent, how much must she invest? today?
a.??If Sarah can earn
55
percent annually for the next
2828
?years, how much will she have to invest? today?
? $nothing??
?(Round to the nearest? cent.)b.??If Sarah can earn
1414
percent annually for the next
2828
?years, how much will she have to invest? today?
?$nothing??
?(Round to the nearest? cent.)
Explanation / Answer
at 5% amount that Sarah must invest today = 2,300,000/1.05^28 = 586,715.37
at 14% amount that Sarah must invest today = 2,300,000/1.14^28 = 58,666.75
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