Susan and her spouse have saved $5,500 for a 12-day cruise vacation in Europe. The couple...

     

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Susan and her spouse have saved $5,500 for a 12-day cruise vacation in Europe. The couple needs $6,500 for a "nice" cabin or $7,000 for a "luxury" cabin. If cabin prices are expected to remain constant for the next three years and Susan expects to earn 5% per year on her investments, will the couple's savings be enough to afford the "nice" cabin in three years? Can they afford the luxury cabin? Why or why not? A home improvement firm has quoted a price of $14,700 to fix up Eric's backyard. Five years ago, Eric put $12,500 into a home improvement account that has earned an average of 4.75% per year. Does Eric have enough money in his account to pay for the backyard fix-up? Your finance professor suggests that you should have $3,000,000 in your retirement portfolio before you even THINK about retiring. Recently, your aunt sold valuable California real estate and handed you a check for $387,500. (This is the amount you have after paying taxes. She is now your favorite aunt.) How much of the $387,500 must you set aside today if you invest a portion of the money at an annual rate of 7.5% and you wish to retire in 38 years with the amount suggested by your finance professor? You are saving money for a down payment on a new house. You intend to place $7,500 at the end of each year for three years into an account earning 5% per year. At the end of the fourth year, you will place $10,000 into this account. How much money will be in the account at the end of the fourth year? The furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay for the furniture in three equal annual end-of-the-year payments of $750 each with the first payment to be made one year from today. If the discount rate is 5%, what is the present value of the furniture payments? Susan and her spouse have saved $5,500 for a 12-day cruise vacation in Europe. The couple needs $6,500 for a "nice" cabin or $7,000 for a "luxury" cabin. If cabin prices are expected to remain constant for the next three years and Susan expects to earn 5% per year on her investments, will the couple's savings be enough to afford the "nice" cabin in three years? Can they afford the luxury cabin? Why or why not? A home improvement firm has quoted a price of $14,700 to fix up Eric's backyard. Five years ago, Eric put $12,500 into a home improvement account that has earned an average of 4.75% per year. Does Eric have enough money in his account to pay for the backyard fix-up? Your finance professor suggests that you should have $3,000,000 in your retirement portfolio before you even THINK about retiring. Recently, your aunt sold valuable California real estate and handed you a check for $387,500. (This is the amount you have after paying taxes. She is now your favorite aunt.) How much of the $387,500 must you set aside today if you invest a portion of the money at an annual rate of 7.5% and you wish to retire in 38 years with the amount suggested by your finance professor? You are saving money for a down payment on a new house. You intend to place $7,500 at the end of each year for three years into an account earning 5% per year. At the end of the fourth year, you will place $10,000 into this account. How much money will be in the account at the end of the fourth year? The furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay for the furniture in three equal annual end-of-the-year payments of $750 each with the first payment to be made one year from today. If the discount rate is 5%, what is the present value of the furniture payments?

Answer rating: 100% (QA)

To determine if the couples savings will be enough to afford the nice cabin in three years we need to calculate the future value of their savings after three years and compare it to the cost of the ca... View the full answer