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Extra Credit - $60,000 11 If upon graduation(age 21 you...

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Name: Aaron New Class: ACC 240 Section Numbers 33858 Extra Credit Assignment Date: October 3, 2010 ACCOUNTING 240 PRESENT VALUE-FUTURE VALUE PROBLEMS (Show computations) 10. Your parents promise to buy your dream car upon graduation from college with your Masters Degree. Your dream car is expected to cost $60,000 in six years. If your parents earn an average return of 8% for 6 years, what amount must they invest each year in order to accumulate $60,000. X*7.3359 = $60,000 X = $8,178.96 They will need to invest $8,178.96 each year for 6 years in order to accumulate
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Unformatted text preview: $60,000. 11. If upon graduation (age 21) you decide to invest in a 401K. You begin at age 21 and invest $3,000 per year for 10 years and then stop. If you wait until age 61 (another 30 yrs) to remove the funds, how much will the funds be worth assuming an average return of 10%? $3,000*15.9374 = $47,812.20 $47,812.20*17.449= $834,275.08 The funds will be worth $834,275.08 when I am 61 years old....
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