You want to save an amount today that will pay for your future annual food bills...

You want to save an amount today that will pay for your future annual food bills that will start next year, and go for 28 years.

The current annual cost of your food bill is $8,704, but the cost is rising at 4% per year.

How much would you have to invest today, to fully pay for your future annual food bills if your investments earn 6.73% APR nominal (annual compounding).

Solutions

Expert Solution

The amount to be invested today will be the Present value of amount that grows 4% rate per year starting now 8,704 discounted at a 6.73% rate.

So,

So, amount to be invested now shall be 164,491.76

jeff jeffy answered 2 years ago

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