Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 18QP
Summary Introduction
To calculate: The
Introduction:
The future value of money refers to the amount of dollars that an investment grows over a definite period at a particular rate of interest rate. In other words, it refers to the future value of present cash investments.
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Students have asked these similar questions
You have just made your first $5,500 contribution to your retirement account.
Assuming you earn a return of 10 percent per year and make no additional
contributions, what will your account be worth when you retire in 45 years?
What if you wait 10 years before contributing? (Does this suggest an
investment strategy?)
Input area:
Present value
Interest rate
Number of years
Number of years
(Use cells A6 to 89 from the given information to complete this
question. Your answer should be a positive value.)
Output area:
$5,500
10%
45
35
Future value
Future value
$
JUST NEED SUBPARTS D AND E
You are trying to decide how much to save for retirement. Assume you plan to save
$4,000
per year with the first investment made one year from now. You think you can earn
7.0%
per year on your investments and you plan to retire in
29
years, immediately after making your last
$4,000
investment.
a. How much will you have in your retirement account on the day you retire?
b. If, instead of investing
$4,000
per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be?
c. If you hope to live for
28
years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the
28th
withdrawal (assume your savings will continue to earn
7.0%
in retirement)?
d. If, instead, you decide to withdraw
$70,000
per year in retirement (again with the first withdrawal one…
What is the relationship between
present value and future value?
• Suppose you need $15,000 in 3 years.
If you can earn 6% annually, how much
do you need to invest today?
• If you could invest the money at 8%, would
you have to invest more or less than at 6%?
How much?
Chapter 5 Solutions
Fundamentals of Corporate Finance
Ch. 5.1 - Prob. 5.1ACQCh. 5.1 - Prob. 5.1BCQCh. 5.1 - Prob. 5.1CCQCh. 5.2 - Prob. 5.2ACQCh. 5.2 - Prob. 5.2BCQCh. 5.2 - What do we mean by discounted cash flow, or DCF,...Ch. 5.2 - Prob. 5.2DCQCh. 5.3 - Prob. 5.3ACQCh. 5.3 - Prob. 5.3BCQCh. 5 - You deposited 2,000 in a bank account that pays 5...
Ch. 5 - Prob. 5.2CTFCh. 5 - Charlie invested 6,200 in a stock last year....Ch. 5 - Prob. 1CRCTCh. 5 - Compounding [LO1, 2] What is compounding? What is...Ch. 5 - Prob. 3CRCTCh. 5 - Compounding and Interest Rates [LO1, 2] What...Ch. 5 - Prob. 5CRCTCh. 5 - Prob. 6CRCTCh. 5 - Prob. 7CRCTCh. 5 - Prob. 8CRCTCh. 5 - Prob. 9CRCTCh. 5 - Prob. 10CRCTCh. 5 - Prob. 1QPCh. 5 - Prob. 2QPCh. 5 - Calculating Present Values [LO2] For each of the...Ch. 5 - Calculating Interest Kates [LO3] Solve for the...Ch. 5 - Prob. 5QPCh. 5 - Calculating Interest Rates [LO3] Assume the total...Ch. 5 - Prob. 7QPCh. 5 - Calculating Interest Rates [LO3] According to the...Ch. 5 - Calculating the Number of Periods [LO4] Youre...Ch. 5 - Prob. 10QPCh. 5 - Prob. 11QPCh. 5 - Prob. 12QPCh. 5 - Calculating Interest Rates and Future Values [LO1,...Ch. 5 - Calculating Rates of Return [LO3] Although...Ch. 5 - Prob. 15QPCh. 5 - Prob. 16QPCh. 5 - Calculating Present Values [LO2] Suppose you are...Ch. 5 - Prob. 18QPCh. 5 - Calculating Future Values [LO1] You are scheduled...Ch. 5 - Prob. 20QP
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