Suppose you can earn 10 percent on an investment rather than 8 percent. After 20 years, the future value will be 25 percent greater. True or false? Explain.
Answer to relevant QuestionsFuture values always grow larger the longer an investment is held. But do they grow proportionately larger? For example, if you hold an investment for 40 years, do you earn twice as much as you would if you hold it for 20 ...You can buy an annuity contract that will pay you $1,000 a year (end of year) for the next 10 years. The contract costs $6,000 today. If you think you should earn 6 percent on such investments, should you buy the contract? ...You have $15,000 to invest today. You hope to buy a new car that costs $25,000 in four years. What approximate rate of interest must you earn to achieve your goal? What is net worth? Does it have anything to do with wealth? Explain two factors that can change net worth from one period to the next. Describe the master budget worksheet, indicating some expenses you think are easy to forecast and some that are more difficult.
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