Chapter 11 Financial Planning Exercise 1 Calculate amount to invest to meet objectives

Use Worksheet 11.1. Phoebe Jones is now employed as the managing editor of a well-known business journal. Although she thoroughly enjoys her job and the people she works with, what she would really like to do is open a bookstore of her own. She would like to open her store in about nine years and figures she'll need about $ 35,000 in capital to do so. Given that Phoebe thinks she can make about 7 percent on her money, use Worksheet 11.1 to answer the following questions.

1. How much would Phoebe have to invest today, in one lump sum, to end up with $35,000 in nine years? Round the answer to two decimal places.

   $

3. If she's starting from scratch, how much would she have to put away annually to accumulate the needed capital in nine years? Round the answer to two decimal places.

   $

5. How about if she already has $15,000 socked away, how much would she have to put away annually to accumulate the required capital in nine years? Round the answer to two decimal places.

   $

7. Given that Phoebe has an idea of how much she needs to save, briefly explain how she could use an investment plan to help reach her objective.