Aficer reviewing the CPI inflation calculator at inflationdata.com, Hanna Lind r

Question

Aficer reviewing the CPI inflation calculator at inflationdata.com, Hanna Lind realized the importance of creating an in . oment plan for her future. She would need $9,691 50 in 2015 to have the same purchasing power her $7,000 (stored in feproof safe in her home since 2010) had when she put it there. To protect her savings against further inflation and to her prepare for a healthy financial future. Hanna depo sits her $7,000 ln an investment account in 2015 earning 6% interest compounded quarterly How much will Hanna have in her account in 2025? (Use tables in the Business Math Handbook) LU 12-112) The International Monetary Fund is trying to raise $500 billion in 5 years for new funds to lend to developing countries. At 6% interest compounded quarterly how much must it invest today to reach S500 billion in 5 years? LU 12-212) You choose to invest your S2 985 income tax refund check (rather than spend it) in an account earning 5% compounded semiannually. How much will the account be worth in 4 years? LU 12-112,3) Imagine how mach you would have in your account if you did this each year Ryan, an owner of a Burger King restaurant, assumes that his restaurant will need a new roof in 7 years. He the roof will cost him ss,000 at that time what amount should Jim invest today at 6% compounded quarterly to be able to pay for the roof? Check your answer. LU 12-2(2) Tony Ring wants to attend Northeast College. He will need $60,000 4 years from today. Assusty's bank pays LU 12-22) l 12% unterest compounded semiannually, what must Tony deposit today so he will have S60 000 in 4 years. Cheok your answer (to the nearest dollar) in Problem 12-23 by using the compound value Table 12.1. The answer will be slightly off due to rounding. LU 12-M3) Petc Air wants to buy a used Jeep in 5 years. He estimates the Jeep will cost $15.000. Assume Pete invests $10.000 now at 12% interest compounded semiannually. Will Petc have enough money to buy his Jeep at the end of 5 years? LU 12-12 LU 12-212) Lance Jackson deposited S500 at Basil Bank at 9% interest compounded daily. What is Lance's investment at the end of 4 years? LU 12-1(2) high school. Assume money LU 12-212) his grandson Jamie that he would give him $6,000 8 years from today for graduating from is worth 6% interest compounded semiannually. What is the present value of this $6,000? to retire in San Diego when he is 65 years old. Earl is now 50. He believes he will need $300,000 retirement money. Assume Earl gets interest compounded to retire comfortably. To date, Earl has set aside no How much must Earl invest today to meet his $300,000 goal? LU 12-2(2)

Explanation / Answer

(Question 1)

Number of years from 2015 to 2025 = 10

Number of quarters = 10 x 4 = 40

Quarterly interest rate = 6% / 4 = 1.5%

Amount in 2025 ($) = 7,000 x FVIF(1.5%, 40) = 7,000 x (1.015)40 = 7,000 x 1.8140 = 12,698

(Question 2)

Number of quarters in 5 years = 5 x 4 = 20

Quarterly interest rate = 6% / 4 = 1.5%

Today's investment ($ Billion) = 500 x PVIF(1.5%, 20) = 500 x (1.015)-20 = 500 x 0.7425 = 371.24

NOTE: As per Chegg answering guideline, only first 2 questions are answered.

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