# Calculating the future values in the given cases

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?

#### 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.