must be invested today to Problem 2 Susan White desires to know the amount of money that must be invested accumulate $100,000 five years in the future. The options are as follows: 1. x amount at an annual rate of interest of 10 percent 2. x amount at a semi-annual rate of interest of 5 percent 3. X amount at an quarterly rate of interest of 2 percent Problem 2(15 points) For each of the three scenarios, answers the following questions: 1. What is the amount desired (it is the same for all three scenarios)? 2. What are the number of periods? O HINT: Annual compounding: the number of periods = the number of years. Semi-annual compounding: the number of periods = the number of years x 2. o Quarterly compounding: the number of periods = the number of years x 4. 3. What is the effective interest rate? HINT: Annual compounding: the effective interest rate the annual Interest rate. Semi-annual compounding: the effective interest rate the annual interest rate/2. o Quarterly compounding: the effective interest rate = the annual interest rate/4. 4. What is the Present Value Factor? 540 HINT: use Exhibit 3. The Table of Present Value Factors for a Single Cash Flow on page 641, along with the number of periods and the effective interest rate, to find the PVF. DO NOT round this number, use all four decimal places listed in the table. 5. What amount of money needs to be invested today? HINT: multiply the amount desired ($100,000) by the Present Value Factor