(b) A person is offered a gift of $5,000 now or $8,000 five years from now. If such funds could be ex- pected to earn 8 percent over the next five years, which is the better choice?  

(c) A person wants to have $3,000 available to spend on an overseas trip four years from now. If such funds could be expected to earn 6 percent, how much should be invested in a lump sum to realize the $3,000 when needed? (d) A person invests $50,000 in an investment that earns 6 percent. If $6,000 is withdrawn each year, how many years will it take for the fund to run out

   

   

Answer rating: 100% (QA)

b To determine which choice is better we need to calculate the future value of 5000 after five years ... View the full answer