# Question: 1 Suppose you invest a sum of 2 500 in

1. Suppose you invest a sum of $ 2,500 in an interest- bearing account at the rate of 12% per year. What will the investment be worth six years from now?

2. How much would you need to invest now to be able to withdraw $ 5,000 at the end of every year for the next 20 years? Assume an 8% interest rate.

3. Assume that you want to have $ 135,000 saved seven years from now. If you can invest your funds at a 6% interest rate, how much do you currently need to invest?

4. Your aunt Betty plans to give you $ 3,000 at the end of every year for the next ten years. If you invest each of her yearly gifts at a 14% interest rate, how much will they be worth at the end of the ten- year period?

5. Suppose you want to buy a small cabin in the mountains four years from now. You estimate that the property will cost $ 54,500 at that time. How much money do you need to invest each year in an interest- bearing account earning 8% per year to accumulate the purchase price?

2. How much would you need to invest now to be able to withdraw $ 5,000 at the end of every year for the next 20 years? Assume an 8% interest rate.

3. Assume that you want to have $ 135,000 saved seven years from now. If you can invest your funds at a 6% interest rate, how much do you currently need to invest?

4. Your aunt Betty plans to give you $ 3,000 at the end of every year for the next ten years. If you invest each of her yearly gifts at a 14% interest rate, how much will they be worth at the end of the ten- year period?

5. Suppose you want to buy a small cabin in the mountains four years from now. You estimate that the property will cost $ 54,500 at that time. How much money do you need to invest each year in an interest- bearing account earning 8% per year to accumulate the purchase price?

**View Solution:**## Answer to relevant Questions

Use the NPV method to determine whether Olde West Products should invest in the following projects: • Project A costs $ 290,000 and offers seven annual net cash inflows of $ 63,000. Olde West Products requires an annual ...Consider how Bear Valley, a popular ski resort, could use capital budgeting to decide whether the $ 8.5 million Autumn Park Lodge expansion would be a good investment. Requirements 1. Compute the average annual net cash ...Santos Products is considering whether to upgrade its manufacturing equipment. Managers are considering two options. Equipment manufactured by Swanson costs $ 1,100,000 and will last for four years with no residual value. ...Alderman industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six- year life and will cost $ 915,000. Projected net cash inflows are as follows: Year ...Splash World is considering purchasing a water park in Charlotte, North Carolina, for $ 2,000,000. The new facility will generate annual net cash inflows of $ 520,000 for ten years. Engineers estimate that the facility will ...Post your question