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Oksi-84 [34.3K]
4 years ago
11

Suppose you are committed to owning a $191,000 Ferrari. If you believe your mutual fund can achieve an annual rate of return of

11 percent and you want to buy the car in 8 years on the day you turn 30, how much must you invest today?
Business
1 answer:
MAXImum [283]4 years ago
4 0

Answer:

Explanation:

In this scenerio we have to use compound interest formula to find the investmen amount:

FV=PV(1+i)^{n}

FV: Future Value (Ferrari price)

PV: Present Value (Investment amount)

i: interest rate (0.11) (11%)

n: time (8 years)

191,000=PV(1+0.11)^{8}⇒ 191,000=PV×2,3045377697175681

PV= $82,879.96=Investment amount

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In general, what are some of the features of alternative financial products?
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4 years ago
If Sally deposits $1200 per year and the account earns interest at a rate of 4% per year, compounded annually, how much will she
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Answer:

$88,382.67

Explanation:

Here is the complete question:

Sally makes deposits into a retirement account every year from the age of 30 until she retires at age 65.If Sally deposits $1200 per year and the account earns interest at a rate of 4% per year, compounded annually, how much will she have in the account when she retires?

To calculate the future value of the annuity, we use this formula: amount x annuity factor

Annuity factor = {[(1+r) ^N ] - 1} / r

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N = number of years = 35

=( 1.04^35 - 1) / 0.04 = 73.652225

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I hope my answer helps you

8 0
4 years ago
At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and this amount was not considered m
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