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2. Elizabeth Stratton is considering building a new annex for her nonprofit. She expects to start and finish construction three years from today. Ms.
2. Elizabeth Stratton is considering building a new annex for her nonprofit. She expects to start and finish construction three years from today. Ms. Stratton needs your help in answering the following questions: 2a. Stratton needs 2,000,000 for the new annex. If she can invest her available cash for construction project today into bonds earning 6% per year, compounded semi-annually, how much should she invest? 2b. Suppose Ms. Stratton has $1,700,000 that she could invest today at an interest rate of 9.5% per year compounded semi-annually. Would there be enough cash for the construction of an annex three years from now? If not, how much more cash is required? 2c. Assume that Ms. Stratton can only earn 2% per year on her investment, compounded monthly. How much should she invest today to arrive at $2,000,000 at the end of year three?
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