Answer Financial planning problem #1

5 percent? Self-Test Solutions 1. Using the Rule of 72, if your money is expected to double in 12 years, you are earning approximately 6 percent 2. To calculate the present value of $10,000 for eight years at 5 percent, use Exhibit 1-8C, p. 19 (or Exhibit 1-C, p. 39): (72 12 years = 6 percent). $10,000 0.677 = $6,770 FINANCIAL PLANNING PROBLEMS (Note: Some of these problems require the use of the time value of money tables in the chapter appendix.) 1. Calculating the Future Value of Property. Ben Collins plans to buy a house for $220,000. If that real estate is expected to increase in value by 3 percent each year, what will its approximate value be seven years from now? (Obj. 3) 27