Purchase Solution

Calculating the future values in the given cases

Not what you're looking for?

Ask Custom Question

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?

Attachments
Purchase this Solution

Solution Summary

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

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 provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.