Aunt Tillie has deposited $33,000 today in an account which will earn 10 percent annually. She plans to leave the funds in this account for seven years earning interest
If the goal of this deposit is to cover a future obligation of $65,000, what recommendation would you make to Aunt Tillie?
FV = 33,000(1.1)7 = $64,308
Aunt Tillie will only have $64,308 at the end of seven years under the stated arrangement. She must find an account with a higher interest rate or deposit a larger sum today.
The amount Aunt Tillie should invest today to receive $65,000 after 7 years, PV = 65,000 / (1.1)7 = $33,355.28
You might also like to view...
In a litigation process, the party who files a complaint is called the ________.
A. bailiff B. plaintiff C. prosecutor D. defendant
In a ring topology
a. all nodes are of equal status b. nodes manage private programs and databases locally c. shared resources are managed by a file server which is a node on the ring d. all of the above
The gap between good buzz and bad buzz is referred to as ________
A) groundswell B) viral marketing C) evangelist marketing D) brand polarization E) the magnifying effect
A(n) ________ is a limit on the amount of goods that an importing country will accept in certain product categories
A) embargo B) tariff C) benchmark D) quota E) exchange control