Chapter 2 Financial Planning Exercise 6 Calculating present and future values

Use future or present value techniques to solve the following problems.

If you inherited $55,000 today and invested all of it in a security that paid a 10 percent rate of return, how much would you have in 15 years? Round the answer to the nearest cent. Round FV-factor to three decimal places. Calculate your answer based on the FV-factor.

$

Calculate your answer based on the financial calculator.

$

If the average new home costs $305,000 today, how much will it cost in 7 years if the price increases by 3 percent each year? Round the answer to the nearest cent. Round FV-factor to three decimal places. Calculate your answer based on the FV-factor.

$

Calculate your answer based on the financial calculator.

$

You forecast that in 11 years it will cost $245,000 to provide your child a 4-year college education. Will you have enough if you take $75,000 today and invest it for the next 11 years at 6 percent? Round the answer to the nearest cent. Round FV-factor and FVA-factors to three decimal places. -Select-YesNoItem 5 , you will have approximately

$

-Select-morelessItem 7 than your estimate of $245,000. If you can earn 3 percent, how much will you have to save each year if you want to retire in 30 years with $1.6 million? Round the answer to the nearest cent. Round FVA-factor to three decimal places. Calculate your answer based on the FVA-factor.

$

Calculate your answer based on the financial calculator.

$