Evaluating a savings goal

Over the past several years, Catherine Lee has been able to save regularly. As a result, today she has $59,441 in savings and investments today. She wants to establish her own business in three years and feels she will need $100,000 to do so. Use the following table to answer the questions.

A. If she can earn 6% on her money, how much will her $59,441 in savings/investments be worth in three years? Round the answer to the nearest cent. Round FV-factor and FVA-factor to three decimal places. Calculate your answer based on the FV-factor.

$

Calculate your answer based on the financial calculator.

$

Will Catherine have the $100,000 she needs?

Yes / No

• If not, how much more money will she need? Round the answer to the nearest cent. Round FV-factor and FVA-factor to three decimal places. Calculate your answer based on the FV-factor.

  $

  Calculate your answer based on the financial calculator.

  $

• B. Given your answer to part a, how much will Catherine have to save each year over the next three years to accumulate the additional money? Assume she can earn interest at a rate of 6%. Round the answer to the nearest cent. Round FV-factor and FVA-factor to three decimal places. Calculate your answer based on the FVA-factor.

  $

  Calculate your answer based on the financial calculator.

  $

• C. If Catherine can afford to save only $4,000 a year then, given your answer to part a, will she have the $100,000 she needs to start her own business in three years?

• Yes / No