1. How much money should you invest today at 8% interest to get it to increase...

1. How much money should you invest today at 8% interest to get it to increase to $ 15,000 in 10 years?

2. What annual interest rate will make $ 500 increase to $ 1,948 in 12 years?

3. Suppose you have won the lottery. You will be receiving $ 72,000 at the end of each year for the next 20 years. Now it turns out that a financial firm offers you the total amount of $ 650,000 at the moment, in exchange for your annual payments. If you can invest your money at a rate of 8% annual interest, should you accept the offer?

YES OR NO?

Solutions

Expert Solution

For Answer to 3, Option 2 ie amount of $ 72,000 each year for next 20 years is the better option. So the offer should not be accepted.

Formulae

jeff jeffy answered 2 years ago

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