Purpose: To illustrate the time value of money. If you want to see how long it will take to reach your financial goals, try using “Investing for Kids Java Goals Calculator.” (Don’t be put off by the title, it’s a rather interesting site.)

Address: http://tqd.advanced.org/3096/3goal.htm (or go to www.wiley.com/college/kimmel)

Steps: Go to the site shown above.

Instructions Your goal is to acquire $35,000 for a down payment on a house. You currently have $2,000 to invest and can contribute an additional $175 per month to reach your goal. Compare the length of time it would take to reach your goal and your net investment gain using the following returns:

(a) 3% (bank deposit)

(d) 11% (common stock)

(b) 5% (T-bill)

(e) 15% (growth stock)

(c) 7% (T-bond) :