Question

Alma wants to have $20,000 in her investment account ten years from now. Currently, she has...

Alma wants to have $20,000 in her investment account ten years from now. Currently, she has nothing saved. How much would she have to deposit today to reach her goal if this is the only amount she invests? She expects to earn 8.5 percent, compounded annually. How much must she deposit today?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Deposit today = Future value * Present Value interest factor ( rate, years )

                     = $ 20,000 * PVIF ( 8.50%, 10 )

                     = $ 20,000 * [ 1 / 1.085 ]10

                    = $ 20,000 * 0.44229

                    = $ 8,845.71 Answer

Alma should invest $ 8,845.71 today.

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
Nicole wants to have 2 million dollars in her account when she retires in 40 years....
Nicole wants to have 2 million dollars in her account when she retires in 40 years. Nicole's retirement account is currently earning 8.5% interest compounded monthly. How much does she need to deposit each month to reach her retirement goal?
Twins Jane and Hal each inherited $150,000 exactly ten years ago. Jane invested the entire amount...
Twins Jane and Hal each inherited $150,000 exactly ten years ago. Jane invested the entire amount in a brokerage account to fund her retirement. Her account has been earning 8% per year since she invested it, and she expects it to earn 5% per year for the next 20 years. Hal spent all of his inheritance and has not saved anything for retirement. Assume there are no taxes. a. How much is Jane expected to have in her account at...
You want to have $15,000 for a down payment on a house 10 years from now....
You want to have $15,000 for a down payment on a house 10 years from now. If you can earn 13 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal?
Ariel wants to save $1,500,000 by her retirement date (32 years from now). If she can...
Ariel wants to save $1,500,000 by her retirement date (32 years from now). If she can earn 9.5% (annual rate) on her investments, how much must she save per month in order to reach her goal of $1,500,000? Group of answer choices $3,906.25 $211.22 $1,208.26 $604.13
Mary's 25th birthday is today, and she hopes to retire on her 65th birthday. She has...
Mary's 25th birthday is today, and she hopes to retire on her 65th birthday. She has determined that she will need to have $5,000,000 in her retirement savings account in order to live comfortably. Mary currently has no retirement savings, and her investments will earn 7% annually. How much must she deposit into her account at the end of each of the next 40 years to meet her retirement savings goal?
At the end of 6 years, Jane wants to accumulate $1,500,000 for a down payment on...
At the end of 6 years, Jane wants to accumulate $1,500,000 for a down payment on a housing unit. She expects to earn 8%—compounded monthly—on her investments over the next 8 years. How much would Jane have to put in her investment account each month to reach her goal? A) $26,300 B) $20,414 C) $16,300 D) $13,684
Time Value  Personal Finance Problem   Misty needs to have ​$18,000 in 4 years to fulfill her...
Time Value  Personal Finance Problem   Misty needs to have ​$18,000 in 4 years to fulfill her goal of purchasing a small sailboat. She is willing to invest a lump sum today and leave the money untouched for 4 years until it grows to ​$18,000​, but she wonders what sort of investment return she will need to earn to reach her goal. Use your calculator or spreadsheet to figure out the approximate annually compounded rate of return needed if she can...
Sara wants to have $500,000 in her savings account when she retires. How much must she...
Sara wants to have $500,000 in her savings account when she retires. How much must she put in the account now, if the account pays a fixed interest rate of 8%, to ensure that she has $500,000 in 20 years time. 1. $231,480 2. $180,884 3. $144,616 4.$107,274 Helen is saving to start a business. If she invests $10,000 in a savings account now, which of the following is the minimum interest rate required to ensure that she has $25,000...
Sue wants to save $1,000,000 in twenty years. She estimates she can earn 8.5 percent on...
Sue wants to save $1,000,000 in twenty years. She estimates she can earn 8.5 percent on savings. She intends to make deposits at the beginning of every year in a series of equal payments starting today. How much does she need to save each year to reach her goal?
1. Kathleen wants to retire on $55,000 per year for 20 years. She estimates that she...
1. Kathleen wants to retire on $55,000 per year for 20 years. She estimates that she will be able to earn interest at the APR of 9% compounded annually, throughout her lifetime. To reach her retirement goal, Kathleen will make annual contributions to her account for the next 35 years. One year after making her last contribution, she will take her first retirement check. How large must her yearly contributions be?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT