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Time Value of Money

1. Over the past several years, Helen Chang has been able to save regularly. As a result, today she has $14,188 in savings and investments. She wants to establish her own business in 5 years and fells she will need $50,000 to do so.

a. If Helen can earn 12% on her money, how much will her $14,188 be worth in about 5 years? Will Helen have the $50,000 she needs? If not, how much more will she need?

b. Given your answer to part a, how much will Helen have to save each year over the next 5 years to accumulate the additional money, assuming she can earn interest at a rate of 12%?

c. If Helen can afford to save only $2000 a year, given your answer to part a, will she have the $50,000 she needs to start her own business in 5 years?

Solution Preview

Please see attached file.

We will use the excel functions in solving these problems. In this problem, we are given the following
Interest Rate
Present Value
Time
Future ...

Solution Summary

The solution explains various questions relating to time value of money

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