If you invest $18,500 today, how much will you have in each of the following instances? Use Appendix A as an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a. In 9 years at 10 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
b. In 17 years at 10 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
c. In 18 years at 10 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
d. In 20 years at 10 percent (compounded semiannually)? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
2. You wish to retire in 13 years, at which time you want to have accumulated enough money to receive an annual annuity of $23,000 for 18 years after retirement. During the period before retirement you can earn 9 percent annually, while after retirement you can earn 11 percent on your money.
What annual contributions to the retirement fund will allow you to receive the $23,000 annuity? Use Appendix C and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
3. Your father offers you a choice of $120,000 in 10 years or $45,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a-1. If money is discounted at 12 percent, what is the present value of the $120,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
a-2. Which offer should you choose?
$120,000 in 10 years
$45,000 today
b-1. Now assume the offer is $120,000 in 7 years or $45,000 today. What is the present value of the $120,000 at 12 percent for 7 years? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
b-2. Now, which offer should you choose?
$45,000 today
$120,000 in 7 years