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Suppose you want to buy a new car. How much do you have to invest today in order to buy the car in the future? The price of the car is $30,000. you want to buy the car in 3 years. The interest rate is 5% each year. price of car: number of years interest rate $30,000 3 5% investment today You borrow $600,000, 30 years mortgage with monthly payment. The annual interest rate is 6%. What is the monthly payment? Present value: number of payment yearly interest rate monthly interest rate monthly payment $600,000 360 6% ? ? You want to reach your retirement goal of $2,000,000 in 40 years. You save $5000 a year. What is the interest rate you must earn in order to reach your goal? Retirement goal: Annual amount to save: (at the beginning of each year) $2,000,000 $5,000 40 Number of years to save: interest rate ? How much m money you need to save today? Assume you save at the beginning of each year? Suppose you want to buy a new car. How much do you have to invest today in order to buy the car in the future? The price of the car is $30,000. you want to buy the car in 3 years. The interest rate is 5% each year. price of car: number of years interest rate $30,000 3 5% investment today You borrow $600,000, 30 years mortgage with monthly payment. The annual interest rate is 6%. What is the monthly payment? Present value: number of payment yearly interest rate monthly interest rate monthly payment $600,000 360 6% ? ? You want to reach your retirement goal of $2,000,000 in 40 years. You save $5000 a year. What is the interest rate you must earn in order to reach your goal? Retirement goal: Annual amount to save: (at the beginning of each year) $2,000,000 $5,000 40 Number of years to save: interest rate ? How much m money you need to save today? Assume you save at the beginning of each year?
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