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# Calculating the future values in the given cases

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Maria received an inheritance of \$750,000 today

a. If she invest it at 8% compounded annually and takes nothing out, how much will she have at the end of 20 years?

b. If she take out \$50,000 to but a car and invest the remainder at 8% compounded annually and takes nothing else out, how much will she have at the end of 20 years?

c. If she invest it at 8% compounded annually and takes out \$75,000 today and \$70,000 at the end of every year thereafter. How much will she have at the end of 20 years?

d. If she invest it at 8% compounded annually and takes out \$75,000 today and \$70,000 at the end of every year thereafter, when will she get the last payment?

e. What rate of interest would she need to take out \$75,000 today and \$70,000 at the end of every year for 20 years?

https://brainmass.com/economics/the-time-value-of-money/calculating-the-future-values-in-the-given-cases-461282

#### Solution Preview

Please refer attached file for clarity of formulas in MS Excel format.

a. If she invest it at 8% compounded annually and takes nothing out, how much will she have at the end of 20 years?

Inherited amount=T=\$750,000
Used amount=U=0
Balance=PV=T-U=\$750,000
Annual withdrawl=PMT=0
Rate of interest=RATE=8%
Number of periods=NPER=20
Type of payment=TYPE=0 End of period with drawls
Future Value=FV=?

We can use FV function in MS Excel to get the value at the end of 20 years

Future Value=FV=\$3,495,717.86 =FV(D9,D10,-D8,-D7,D11)

b. If she take out \$50,000 to but  a car and  invest the remainder at 8% compounded annually and takes nothing else out, how much will she have at the end of 20 ...

#### Solution Summary

Solution calculates the future values in the given cases with the help of functions in MS Excel.

\$2.19