We will assume that we saved $1,700. We can earn 7%. We will say that we will set aside the $1,700 for eight years. What is the future value? FV = PV (1+r)^n =$1,700 x (1+0.07)^8 =$1,700 x (1.07)^8 How do we solve for 1.07^8? We multiply 1.07 eight times. Or, we use the power key on the calculator. FV = PV (1+r)^n =$1,700 x (1+0.07)^8 =$1,700 x (1.07)^8 =$1,700 x 1.72 =$2,924 In eight years, our $1,700 becomes $2,924. What is the future in 20 years and 30 years? Based on your answer, would you be willing to set aside $1,700 for 20 years or 30 years? Why?

We will assume that we saved $1,700. We can earn 7%. We will say that we will set aside the $1,700 for eight years. What is the future value? FV = PV (1+r)^n =$1,700 x (1+0.07)^8 =$1,700 x (1.07)^8 How do we solve for 1.07^8? We multiply 1.07 eight times. Or, we use the power key on the calculator. FV = PV (1+r)^n =$1,700 x (1+0.07)^8 =$1,700 x (1.07)^8 =$1,700 x 1.72 =$2,924 In eight years, our $1,700 becomes $2,924. What is the future in 20 years and 30 years? Based on your answer, would you be willing to set aside $1,700 for 20 years or 30 years? Why?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 11EA: How much would you invest today in order to receive $30,000 in each of the following (for further...

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