Time Value Calculations
Evaluate each independent situation using the appropriate table and an interest rate of 12 percent.
a. You would like to relax and not work for the next six years, but you would like to withdraw $25,000 at the end of each year. How much must you have in your investment account now to be able to do this?
b. You would like to have $100,000 upon graduation. How much should you invest in a fund at the end of each year for the next four years?
c. Your firm signs a contract to repay $1,000,000 in five years. How much will the firm receive today in exchange for this promised future payment?
d. You have found some wonderful mountain property. You’re thinking if you could invest a single sum of $50,000 for five years you might be able to buy a parcel of land that costs $70,000.However, the land cost is expected to appreciate compounded at four percent per year.Can you afford the land?
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