Present Value Examples

Present Value Examples - PresentValueExamples 1.

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Present Value Examples  1. You have $200,000 to invest.  You could invest in a rental house which will  return you $8,000 per year for 10 years and be worth $350,000 at the end or in a  stock which you think will be worth $ 300,000 in 5 years.  Which would you  pursue if your RRR is 8%? 2. Using a discount rate of 10%, would you rather have $20,000 per year for 5 years  or $70,000 today? 3. You have 40 years until retirement and expect, on average, an 8% return on your  retirement investments.  How much will you need to save each year in order to  retire with $2,000,000? 4. You only have 20 years until retirement: how much do you have to save each year  in order to retire w/ $2,000,000? 5. You have 40 years until retirement but don’t want to save annually: how much do  you invest today to have the same $2,000,000 when you retire at 8%? 6.
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This note was uploaded on 02/20/2012 for the course ACCT 226 taught by Professor Smith during the Spring '10 term at South Carolina.

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