Amount to invest to meet objectives Use Worksheet 11.1. Ashley Olson is early in her career and is now employed as the managing editor of a well-known business Journal, Although she thoroughly enjoys her job and the people she works with, she would really like to be a literary agent. She would like to go on her own in about 8 years and figures she'll need about $50,000 in capital to do so. Given that she thinks she can make about 10 percent on her money, use Worksheet 11.1 to answer the following questions a. How much would Ashley have to invest today, in one lump sum, to end up with $50,000 in 8 years? Round the answer to the nearest cent. $ b. If she's starting from scratch, how much would she have to put away annually to accumulate the needed capital in 8 years? Round the answer to the nearest cont. $ C. How about if she already has $20,000 socked away, how much would she have to put away annually to accumulate the required capital in 8 years? Round the answer to the nearest cent $ d. Given that Ashley has an idea of how much she needs to save, briefly explain how she could use an investment plan to help reach her objective, The input in the box below will not be graded, but may be reviewed and considered by your instructor 1 H 1 K DETERMINING AMOUNT OF INVESTMENT CAPITAL NEEDED 2 3 Financial goal: 4 7 . % $ $ . 1. Targeted Financial Goal (see Note 1), Desired Future Value 8 $ 2. Projected Average Return on Investments 9 A. Finding a Lump-Sum Investment to fund Targeted Financial Goal: 10 3. Future Value of a Single Cash Flow 11 based on years until desired financial goal stated in line 1 12 (FV) given an average return of %; solve for lump-sum 13 investment as present value (PV) 14 B. Making a Series of Investments over Time: 15 4. Amount of initial Investment, if any (see Note 2) 16 5. Future Value of Initial Investment 17 based on N = .IN %, and PV; 18 solve for future value (FV) $ 19 6. Balance to come from Savings Plan 20 line 1 - line 5 $ 21 7. Future Value Annuity Amount 22 based on N I/Y= %, and future value of annuity 23 (FVA); solve for annuity amount (PMT) $ Note 1: The "targeted financial goal is the amount of money you want to accumulate by 25 some target date in the future. Note 2: If you're starting from scratch with no initial investment-enter zero on line 4, skip line 5, and then use the total targeted financial goal (from line 1) as the amount to be funded from a savings plan; now proceld with the rest of 26 the worksheet
