Answered: If the rate of interest (r) is 9%, then…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 35P

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Question

If the rate of interest (r) is 9%, then you should be indifferent about receiving $7500 in one year or ________.

Your parents are planning to retire in 18 years. They currently have $250,000 and they would like to have $1,000,000 when they retire. What annual rate of interest would they have to earn on their $250,000 in order to reach their goal, assuming they save no more money?

Stella deposits $45,000 in a savings account at a bank that offers interest of 3.5% on such accounts. What is the value of the money in her savings account in five years’ time?

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