Explore BrainMass

Explore BrainMass

    Budgeting and investments

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    As part of your personal budgeting process you have determines that in each of the next 5 years you will have budget shortfalls. In other words, you will need the amounts shown in the following table at the end of the given year to balance your budget - that is, to make inflows equal outflows. You expect to earn 9% on your investments during the next 5 years and wish to fund the budget shortfalls over the next 5 years with a single amount. 7,000 4,000 8,000 10,000 13,000

    A. How large must the single deposit today into an account paying 8% annual interest be provided for full coverage of the anticipated budget shortfalls?
    B. What effect would an increase in your earnings rate have on the amount calculated in part a? Explain.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:18 pm ad1c9bdddf
    https://brainmass.com/business/business-management/budgeting-and-investments-224859

    Attachments

    Solution Preview

    As part of your personal budgeting process, you have determined that in
    each of the next 5 years you will have budget shortfalls. In other words,
    you will need the amounts shown in the following table at the end of the
    given year to balance your budget?that is, to make inflows equal outflows.
    You expect to be able ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer how large must the single deposit today into an account paying 8% annual interest be provided for full coverage of the anticipated budget shortfalls and what effect would an increase in your earnings rate have on the amount calculated in part a.

    $2.19

    ADVERTISEMENT