A. Starting with $10,000, how much will you have in 10 years if you can earn 15 percent on your money?
b. If you inherited $25,000 today and invested all of it in a security that paid a 10 percent rate of return, how much would you have in 25 years?
c. If the average new home costs $125,000 today, how much will it cost in 10 years if the price increases by 5 percent each year?
d. If you can earn 12 percent, how much will you have to save each year if you want to retire in 35 years with $1 million?
a. Starting with $10,000, how much will you have in 10 years if you can earn 15 percent on your money?
We have a lump sum and we have to find the future value. The future value of a lump sum is calculated as
Future Value (FV)= Present Value (PV) X (1+r)^n
Where r is the interest rate and n is the time period. In this problem
PV = 10,000
FV = 10,000 X (1+15%)^10 = 40,455.58
In 10 years you will have ...
The solution has various questions relating to time value of money