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Tpy6a [65]
2 years ago
14

Sarah Wiggum would like to make a single investment and have ​$2 million at the time of her retirement in 35 years. She has foun

d a mutual fund that will earn 4 percent annually. How much will Sarah have to invest​ today? If Sarah invests that amount and could earn a 14 percent annual​ return, how soon could she​ retire, assuming she is still going to retire when she has ​$2 ​million?
Business
2 answers:
Anarel [89]2 years ago
5 0

Answer:

Solution please, where did you get .2534?

ra1l [238]2 years ago
3 0

Answer:

a) Amount to be invested today = $506,830.9

b) She will retire in 10.5 years time

Explanation:

The amount to be invested by Sara Wiggum today at 4%  to accumulate $2 million in 35 years is called the Present Value.

Present value (PV) is  the discounted value of a future amount at the opportunity cost rate of return .  The amount to be invested now at a particular rate of return to equal a future sum.

Present Value (PV)= (1+r)^(-n) × Future cash flow

For Sarah, the

PV = (1+0.04)× (-35) × 2,000,000

    = 0.2534 × 2,000,000

     = 506,830.9415

Amount to be invested today = $506,830.9

<em>How soon will She retire at rate of 14% per annum?</em>

The PV is still  506,830.9415,

FV is still 2,000,000,

But rate now is - 14%, and

n - ?.  

so we need to work out "n"

Work out "n" as folows:

(1+0.14)^(-n) = 2000000/506,830.9

(1+0.14)^(-n)   = 3.9406

n =  log 3.9406/log 1.14

n = 10.5 years

She will retire in 10.5 years time

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4 0
2 years ago
Adams Industries holds 42,000 shares of FedEx common stock, which is not a large enough ownership interest to allow Adams to exe
olga2289 [7]

Answer:

investment in FedEx = 4410000

Unrealized holding gain = 420000

Explanation:

given data

FedEx common stock = 42,000 shares

market value = $95

market value = $105

to find out

what amount will it be reported in the 2019 balance sheet

solution

we know that It is coming under available for sale security since the shares hold is less than majority of outstanding shares

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investment in FedEx =42,000  × 105

investment in FedEx = 4410000

and

Unrealized holding gain is = ( 105 - 95 ) × 42000

Unrealized holding gain = 420000

5 0
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