Henry Bogut just received a signing bonus of $1,086,900. His plan is to invest this payment in a fund that will earn 9%, compounded annually. (a) If Bogut plans to establish the AB Foundation once the fund grows to $1,986,897, how many years until he can establish the foundation? 7 years (b) Instead of investing the entire $1,086,900, Bogut invests $313,900 today and plans to make 7 equal annual investments into the fund beginning one year from today. What amount should the payments be if Bogut plans to establish the $1,986,897 foundation at the end of 7 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
Henry Bogut just received a signing bonus of $1,086,900. His plan is to invest this payment in a fund that will earn 9%, compounded annually. (a) If Bogut plans to establish the AB Foundation once the fund grows to $1,986,897, how many years until he can establish the foundation? 7 years (b) Instead of investing the entire $1,086,900, Bogut invests $313,900 today and plans to make 7 equal annual investments into the fund beginning one year from today. What amount should the payments be if Bogut plans to establish the $1,986,897 foundation at the end of 7 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 39P
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Question
Henry Bogut just received a signing bonus of $1,086,900. His plan is to invest this payment in a fund that will earn 9%, compounded annually.
(a)
If Bogut plans to establish the AB Foundation once the fund grows to $1,986,897, how many years until he can establish the foundation?
| 7 | years |
(b) Instead of investing the entire $1,086,900, Bogut invests $313,900 today and plans to make 7 equal annual investments into the fund beginning one year from today. What amount should the payments be if Bogut plans to establish the $1,986,897 foundation at the end of 7 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
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