In a book named "Cases in Financial Management," Case 1 - Davis, Michael, and Company

Topic - Discounted Cash Flow Analysis

14th - edition

On the Texas Instruments BA II Plus Financial Calculator, press 1 N 10 I/Y 10000 + I- (I key to make it a negative number - calculator assumes a cash outflow) PV 0 PMT CPT FV (answer = $11,000

It is estimated that in five years the total cost for one year of college will be $20,000.

How much must be invested today in a CD paying 10 percent annual interest in order to accumulate the neee $20,000?

If only $10,000 is invested, what annual interest rate i needed to produce $20,000 after five years?

Change 20,000 to 10,000