eBook

Do the Math $1-5$

Present and Future Values

Using the present and future value tables in Appendix A$,$ the appropriate calculations on the Garman$/$Forgue companion website, or a financial calculator, calculate the following:

a$.$ The amount a person would need to deposit today to be able to withdraw $$8,000$ each year for ten years from an account earning $4$ percent. Round your answer to the nearest whole dollar. Round Present Value of Series of Equal Amounts in intermediate calculations to four decimal places.

$ $$

b$.$ A person is offered a gift of $$4,900$ now or $$8,000$ five years from now. If such funds could be expected to earn $5$ percent over the next five years, which is the better choice? Round Future Value of a Single Amount in intermediate calculations to four decimal places. $$

c$.$ A person wants to have $$1,000$ available to spend on an overseas trip four years from now. If such funds could be expected to earn $7$ percent, how much should be invested in a lump sum to realize the $$1,000$ when needed? Round your answer to the nearest whole dollar. Round Present Value of a Single Amount in intermediate calculations to four decimal places.

$ $$

d$.$ A person invests $$50,000$ in an investment that earns $6$ percent. If $$6,340$ is withdrawn each year, how many years will it take for the fund to run out? Round to the nearest whole year. Round Present Value of Series of Equal Amounts in intermediate calculations to four decimal places. $$

years