Organizing And Managing Your Financial Resources Unit 1 Ip

1,236 views

Published on

Organizing And Managing Your Financial Resources

Published in: Economy & Finance, Technology
  • Be the first to comment

  • Be the first to like this

Organizing And Managing Your Financial Resources Unit 1 Ip

  1. 1. Answer to the 1st Question Present value of an annuity of $12000 for 10 years at 12% Pv of annuity = Pymt per period * ((1-(1/(1+i)^n))/i) PV = Pymt = 12000 I= 0.12 n= 10 PV 67802.68 This was done by using PV = 12000 * ((1-(1/(1 + 0.12) ^ 10))/0.12) PV = 67802.68 Answer - $67802.68 is what would be required in order to be invested today to pay out Joe's Prize money over the Answer to the 2nd Question First we need to find the FV of $33000 invested at 10% per year for the next 7 yrs. PV = 33000 I= 0.1 n= 7 FV = PV * (1 + i) ^ n FV = 33000 * (1 + 0.10) ^ 7 FV = 64307.66 Answer - Mary will have $64,307.66 in her account at the end of 7 years. Answer to the 3rd Question Mary and Joe have $2500 in the account and need $10000 by the end of 3 years. First I'll find the future value of $2500 invested at an 8% rate per year. PV = 2500 I= 0.08
  2. 2. n= 3 FV = PV * (1 + i) ^ n FV = 2500 * (1 + 0.08) ^ 3 FV = 3149.28 Mary and Joe will have $3,149.28 in their account at the end of 3 years, but they will also need $6,850.72 ($10000 - $31 I will need to find the payment or (annuity that is required) so that the FV of annuity is $6,850.72 FV of annuity = Pymt per period * (((1 + i) ^ n -1)/i) FV = 6850.72 Pymt = ? I= 0.08 n= 3 6850.72 = P * ((( 1 + .08) ^ 3 -1)/0.08) P = 6850.72/((( 1+ .08) ^ 3 - 1)/0.08) P = 2110.251 Answer - Mary and Joe will need to invest $2,110.25 each year in order to get $6,850.72 at the end of 3 years.
  3. 3. Unit 1 IP Carla J. McCoy ay to pay out Joe's Prize money over the next 10 years.
  4. 4. ey will also need $6,850.72 ($10000 - $3149.28) to even buy the furniture nnuity is $6,850.72 50.72 at the end of 3 years.

×