Financial Planning Exercise 1

Use Worksheet 11.1. Linda Scales is a young career woman who's 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 7 years and figures she'll need about $ 75,000 in capital to do so. Given that she thinks she can make about 7 percent on her money, use Worksheet 11.1 to answer the following questions.

How much would Linda have to invest today, in one lump sum, to end up with $ 75,000 in 7 years? Round the answer to two decimal places.

$

If she's starting from scratch, how much would she have to put away annually to accumulate the needed capital in 7 years? Round the answer to two decimal places.

$

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 7 years? Round the answer to two decimal places.

$