Ask Question
BusinessBusiness
22 October, 06:07

Calculating Present Values. Suppose you are still committed to owning a $150,000 Ferrari (see Question 9). If you believe your mutual fund can achieve a 10.25 percent annual rate of return, and you want to buy the car in 10 years on the day you turn 30, how much must you invest today?9. Calculating Present Values. Suppose you are still committed to owning a $150,000 Ferrari (see Question 9). If you believe your mutual fund can achieve a 10.25 percent annual rate of return, and you want to buy the car in 10 years on the day you turn 30, how much must you invest today? a. PV * (1 +.1025) ^10 = $150,000b. PV * (1.1025) ^10 = $150,000c. PV * (2.65239) = $150,000d. PV = $150,000/2.65239e. PV = $56,533.42

+2
Answers (1)
  1. 22 October, 09:01
    0
    All the options written are the steps involved in solving the problem. The formula that would be used is compounding formula because we have future value which is $150,000 and rate of return which is 10.25%. Furthermore, here n is 10 years time.

    The formula is:

    Future Value = Present Value * (1 + r) ^n

    $150,000 = Present Value * (1.1025) ^10

    $150,000 = Present Value * 2.6524

    $150,000 / 2.6524 = Present Value

    Present Value = $56553

    So the amount that we should deposit in mutual funds today to buy Ferrari is $56553. The difference is due to rounding off.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Calculating Present Values. Suppose you are still committed to owning a $150,000 Ferrari (see Question 9). If you believe your mutual fund ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
The prospects for success facing your startup are risky: there is a 0.5 probability that you lose $1 million, 0.2 probability that you break even, and 0.3 probability that you make $5 million. What is the expected return from the startup? A.
Answers (1)
A closer look: differences among the nutrition standards and guidelines and when
Answers (1)
The best way to treat a computer-based customer relationship manageent system is to consider it as a/an ___system? A0 Back-ended B integrated C. Bridge D front-end
Answers (2)
Interest rates and the price of old or existing bonds are a. directly related. b. independent of each other. c. inversely related. d. sometimes directly related and sometimes inversely related. e.
Answers (1)
A summary record of each person's earning, deductions, and net pay is called a/an
Answers (2)
New Questions in Business
Holding the nonprice determinants of supply constant, a change in price would a. result in either a decrease in supply or an increase in supply. b. have no effect on the quantity supplied. c. result in a shift of demand. d.
Answers (1)
The Converting Department of Worley Company had 2,400 units in work in process at the beginning of the period, which were 35% complete. During the period, 10,800 units were completed and transferred to the Packing Department.
Answers (1)
Most publishing jobs can be secured without a college degree. True False
Answers (1)
We observe both the price and quantity sold of ketchup falls over time. assuming all else stayed the same, this is due to:
Answers (1)
Employees indicate their willingness to be represented by a union by signing a/an:
Answers (1)
Home » Business » Calculating Present Values. Suppose you are still committed to owning a $150,000 Ferrari (see Question 9). If you believe your mutual fund can achieve a 10.
Sign Up Forgot Password?