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15 May, 23:04

Suppose you are committed to owning a $215,000 ferrari. if you believe your mutual fund can achieve an annual return of 10.8 percent, and you want to buy the car in 9 years on the day you turn 30, how much must you invest today? (do not round intermediate calculations and round your answer to 2 decimal places,

e. g., 32.16.)

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  1. 16 May, 00:53
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    Given, Future value (FV) = 215,000

    Interest rate = r = 10.8% = 0.108

    Number of years = n = 9

    Present value = FV / (1+r) ^n

    Present value = 215000 / (1+0.108) ^9

    Present value = 215000/1.108^9

    Present value = 85,424.14

    The amount that you must invest today = $85,424.14
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