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Sachiko decided to invest in an investment plan in each year for 40 years. The investment will earn an interest rate of 5% annually. She
Sachiko decided to invest in an investment plan in each year for 40 years. The investment will earn an interest rate of 5% annually. She will invest $2,000 in each year in the investment plan. In order to do so, she will give up similar investments that will earn an interest rate of $4% annually (Hint: use this opportunity cost (4%) to calculate present value of the investment). All cash flow occurs at the end of a year. How much is the investment worth today? Show your calculations.
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