problems chap 1 2 3

# problems chap 1 2 3 -...

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A.           You invest \$500 at 15% rate of return for 12 years.  How much will you have at the  end of the 12-year period? _______ This is a Future Value Problem FV=PV x FVIF (i,n)   PV=\$500 i=15% n=12 years FV=?   Use Table C-1   Answer: \$500 * 5.350= \$2675   B.            You want to begin a college fund for your new born child; you hope to accumulate  \$30,000 by 18 years from now.  If a current investment opportunity yields 7 percent, how  much must you invest in a lump sum to realize the \$30,000 when needed? _______ This is a Present Value problem. Use Table C-2. PV= FV x PVIF (i,n) FV= \$30,000 i=7% n= 18 years PVIF(i,n)= .296   Answer: \$30,000 * 0.296 = \$8,880 C.            You plan to retire after 16 years.  To provide for that retirement, you initiate a savings

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## This note was uploaded on 02/22/2012 for the course FINANCE 250 taught by Professor Maryevans during the Spring '12 term at Rutgers.

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problems chap 1 2 3 -...

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