Question

In three years, when he is discharged from the Air Force, Steve wants to buy an...

In three years, when he is discharged from the Air Force, Steve wants to buy an $18,000 power boat. Required: What lump-sum amount must Steve invest now to have the $18,000 at the end of three years if he can invest money at: (Use Microsoft Excel to calculate present values. Do not round intermediate calculations.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Note: assume that he can invest monet at : (a) ten percent (b) Fourteen percent
To compute the amount of investment today (present value), to derive the amount to receive in future
Investment value x discount factor = present value
Invest value = present value / discount factore
a ten perscent = 25,000/2.4587
$10,052
b Fourteen percent = 25,000/2.322
$10,767
Using the financial calculator for discounting factor, or use the available chart
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In five years, when he is discharged from the Air Force, Steve wants to buy a...
In five years, when he is discharged from the Air Force, Steve wants to buy a $34,000 power boat. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: What lump-sum amount must Steve invest now to have the $34,000 at the end of five years if he can invest money at: (Round your final answer to the nearest whole dollar amount.) Six percent : Twelve Perent:
Bob wants to buy a $1,580,000 retirement home in fifteen years in Key West. He wants...
Bob wants to buy a $1,580,000 retirement home in fifteen years in Key West. He wants to know what interest rate will allow him to achieve this goal if he has $340,000 to invest today. You will make the following investments for a boat: $1,500 today, $3,000 at the end of year four, and $1800 at the end of year nine. How much will you have in twelve years if you can earn 4% on your investments? What is an...
Al Derover wants to buy a used vehicle in five years. He estimates the cost will...
Al Derover wants to buy a used vehicle in five years. He estimates the cost will be $12,000. If he invests $8,500 now at a rate of 10% compounded semiannually, how much will he have? Will he have enough money to buy the vehicle at the end of five years? (Round your answer to the nearest cent.)
Jed wants to borrow ​$1,000 from you. He is proposing to repay you with three annual...
Jed wants to borrow ​$1,000 from you. He is proposing to repay you with three annual payments of ​ $347.03 starting one year from now. In​ addition, he will make a final​ lump-sum payment of ​$120 three years from today. What rate of return are you earning on the​ loan? What rate of return are you earning on the​ loan?
Dr. J. wants to buy a Dell computer that will cost $3,000 three years from today....
Dr. J. wants to buy a Dell computer that will cost $3,000 three years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn an 8% annual return. How much should he set aside beginning a year from now? The last part of the question is tripping me up. Thanks.
The user wants to save money to buy a new car 10 years from today. Have...
The user wants to save money to buy a new car 10 years from today. Have the user input the amount that they can invest at the start of each year and the price of the car that they want to buy. What annual interest rate will they need to earn in order to be able to buy the car 10 years from today? Note: This question is from excel for accounting, so the calculation should be made in an...
What is the present value of $200 to be received two years from now, with an...
What is the present value of $200 to be received two years from now, with an interest rate of 5%? You deposit $2000 today at 6% interest. How much will you have in 5 years? You invest $5,000 today. You will earn 8% interest. How much will you have in 4 years? You have $450,000 to invest. If you think you can earn 7%, how much could you accumulate in 10 years? You deposit $300 each year for 15 years...
15 years from now, your 2-year old son will be attending Harvard. You have determined he...
15 years from now, your 2-year old son will be attending Harvard. You have determined he will need $85,000 per year for tuition and living expenses. In 15 years, you will give him a lump sum payment for the entire amount he will need, assuming that he will be able to invest the money not yet needed at 4.5% interest. You have found an investment opportunity that will yield an annual return of 6.5% on your monthly payments. How much...
15 years from now, your 2-year old son will be attending Harvard. You have determined he...
15 years from now, your 2-year old son will be attending Harvard. You have determined he will need $85,000 per year for tuition and living expenses. In 15 years, you will give him a lump sum payment for the entire amount he will need, assuming that he will be able to invest the money not yet needed at 4.5% interest. You have found an investment opportunity that will yield an annual return of 6.5% on your monthly payments. How much...
15 years from now, your 2-year old son will be attending Harvard.  You have determined he will...
15 years from now, your 2-year old son will be attending Harvard.  You have determined he will need $85,000 per year for tuition and living expenses.  In 15 years, you will give him a lump sum payment for the entire amount he will need, assuming that he will be able to invest the money not yet needed at 4.5% interest.  You have found an investment opportunity that will yield an annual return of 6.5% on your monthly payments.  How much will you have to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT