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26. $ provide you with $30,000 for a down payment for your first home. You mentioned to her you plan to buy a home in 6 years. She agrees to set aside money for you today so she will have money to give you when you purchase your first home. The market rate she can earn over the investment period is 6% and it will compound quarterly, what amount will she set aside today? (Round to nearest dollar) Your favorite aunt has committed to

26. $ provide you with $30,000 for a down payment for your first home. You mentioned to her you plan to buy a home in 6 years. She agrees to set aside money for you today so she will have money to give you when you purchase your first home. The market rate she can earn over the investment period is 6% and it will compound quarterly, what amount will she set aside today? (Round to nearest dollar) Your favorite aunt has committed to

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN:9781337117005
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter2: Using Financial Statements And Budgets
Section: Chapter Questions
Problem 5FPE
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Question 26
TIME VALUE OF MONEY (use BAII Plus Financial Calculator to answer questions 25 – 30). If you do not have a financial calculator use the Preferred Short Cut Factor Tables spreadsheet found in Canvas Modules. 25. $ You plan to start your own business in 5 years once you graduate from college and get situated. You plan save $250 every month for the next 5 years. The market rate you can earn is 9%; how much will your investment accumulate to when you are ready to start your business? (Round to nearest dollar) 26. $ Your favorite aunt has committed to provide you with $30,000 for a down payment for your first home. You mentioned to her you plan to buy a home in 6 years. She agrees to set aside money for you today so she will have money to give you when you purchase your first home. The market rate she can earn over the investment period is 6% and it will compound quarterly, what amount will she set aside today? (Round to nearest dollar) 27. $ You won the lottery when the jackpot was advertised at $3,000,000 (based on annual payments of $100,000 for 30 years). Your choice is to take the annual payments for 30 years or take the lump sum payout today which is the present value of the advertised jackpot. The lottery administration uses a 3.5% interest rate. What is the value of the lump sum payout? (Round to nearest dollar)
Transcribed Image Text:TIME VALUE OF MONEY (use BAII Plus Financial Calculator to answer questions 25 – 30). If you do not have a financial calculator use the Preferred Short Cut Factor Tables spreadsheet found in Canvas Modules. 25. $ You plan to start your own business in 5 years once you graduate from college and get situated. You plan save $250 every month for the next 5 years. The market rate you can earn is 9%; how much will your investment accumulate to when you are ready to start your business? (Round to nearest dollar) 26. $ Your favorite aunt has committed to provide you with $30,000 for a down payment for your first home. You mentioned to her you plan to buy a home in 6 years. She agrees to set aside money for you today so she will have money to give you when you purchase your first home. The market rate she can earn over the investment period is 6% and it will compound quarterly, what amount will she set aside today? (Round to nearest dollar) 27. $ You won the lottery when the jackpot was advertised at $3,000,000 (based on annual payments of $100,000 for 30 years). Your choice is to take the annual payments for 30 years or take the lump sum payout today which is the present value of the advertised jackpot. The lottery administration uses a 3.5% interest rate. What is the value of the lump sum payout? (Round to nearest dollar)
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