Time value of money and investment decision


Problem: Andrew Bogut just received a signing bonus of $1,000,000. His plan is to invest this payment in a fund that will earn 8%, compounded annually.

1) If Bogut plans to establish the AB Foundation once the fund grows to $1,999,000, how many years until he can establish the foundation?

2) Instead of investing the entire $1,000,000, Bogut invests $300,000 today and plans to make 9 equal annual investments into the fund beginning one year from today. What amount should the payments be if Bogut plans to establish the $1,999,000 foundation at the end of 9 years?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Time value of money and investment decision
Reference No:- TGS02034892

Now Priced at $20 (50% Discount)

Recommended (90%)

Rated (4.3/5)