posted by Jeremy on .
A woman would like to open a store in 8 years. She figures she will need 50,000 in capital to do so. She will make 10% on her money.
a. How much would she need to invest today in one lump sum to end up with 50000 in 8 years?
I got 23,325.25
b. if she's starting from scratch how much would she have to put away annually to accuulate the needed capital in 8 years?
I got 1247.82
c. how about if she already has 10,000 put away, how much would she have to put away to accumulate the needed capital in 8 years?
--This is the one I am stuck on. Also check my previous answers, they seem right but IDK. Thanks for any input!
a. P = Po + Po*r*t.
Po + Po*0.10*8 = $50,000.
Po + 0.8Po = 50,000.
1.8Po = 50,000.
Po = 50,000 / 1.8 = $27,777.78.
answer to c. If you expect to earn a 10.000% interest rate, compounded annually, you will need to deposit/invest $18,660.30 now in order for your investment to grow to $40,000.00 over the course of the next 8 years.