Question

You have just inherited $590,000. You plan to save this money and continue to live off the money that you are earning in your current job. If you can invest the money in a bond that pays 4.03 percent interest annually, how long will it be before your inheritance is worth $1 million? (If you solve this problem with algebra round intermediate calculations to 5 decimal places, in all cases round your final answer to 2 decimal places, e.g. 8.72.)

Inheritance will be worth $1 million in

years

Ivanhoe Corp had sales of $376,000 in 2017. If management expects its sales to be $476,450 in 3 years, what is the rate at which the company’s sales are expected to grow? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to 2 decimal places, e.g. 8.72%.)

Growth rate

%

Donna Clark needs to decide whether to accept a bonus of $1,620 today or wait two years and receive $1,910 then. She can invest at 6 percent. What should she do?

select an option                           YesNo, she should not accept the bonus today.

Answer 1

1)	FV= PV*(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Interest rate
	n= periods in number
	1000000= $590000*( 1+0.0403)^n
	1000000/590000 =1.0403^n
	n =13.35
	Inheritance will be worth $1 million in 13.35 years
2)	FV= PV*(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Growth rate
	n= periods in number
	$476450= $376000*( 1+r)^3
	476450/376000 =(1+r)^3
	r =8.21%
	Growth rate =8.21%
3)	PV= FV/(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Interest rate
	n= periods in number
	= $1910/( 1+0.06)^2
	=1910/1.1236
	= $1699.89
	Present value of $1910 is greater than $1620
	hence
	NO, she should not accept the bonus