Ask Question
BusinessBusiness
4 May, 03:09

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

+3
Answers (1)
  1. 4 May, 03:35
    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 the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Under what circumstances is it most clear that the government should pursue neither fiscal nor monetary policy? A. There is no inflation and the unemployment rate equal the target rate of unemployment. B.
Answers (1)
If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
Answers (1)
The goldsmith's ability to create money was based on the fact that: A) people preferred to use paper money as a medium of exchange. B) the goldsmith was required to keep 100% gold reserves. C) consumers preferred to use gold for transactions.
Answers (1)
Although Elton Mayo originally intended to collect data for a traditional scientific management study, his breakthrough research led to further research on the kinds of things that drive employees to successfully meet and exceed productivity goals
Answers (1)
How do owners of large estates spend their time answer key with work?
Answers (1)
New Questions in Business
F Rudy offers Oscar $200 for his laptop valued at $600 and Oscar agrees, a court will probably
Answers (1)
Assume the world market for oil is competitive and that the marginal cost of producing (extracting and bringing to market) another barrel of oil is $81.40 and the marginal benefit is $79.20.
Answers (1)
Beautiful Lawns Company estimates its doubtful accounts by aging its accounts receivable and applying percentages to various aged categories of accounts.
Answers (1)
Select three situations when an agency can perform a warrantless search. a. highly regulated industries b. personal services c. exporting businesses d. emergency situations e. certain types of hazardous operations f. internet businesse
Answers (1)
Which of the following payroll deductions is required by law?
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?