Exercise 9-3 Margaret wants to buy a car when she graduates from Central Univers

Question

Exercise 9-3 Margaret wants to buy a car when she graduates from Central University 4 years from now. She believes that she will need $29,900 to buy the car. Click here to view the factor table (a) Calculate how much money Margaret must put into her savings account today to have $29,900 in 4 years, assuming she can earn 14% compounded annually. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,975.) Amount $ (b) Calculate how much money Margaret must put into her savings account today to have $29,900 in 4 years, assuming she can earn 14% compounded semiannually. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,975.) Amount $

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount a) Amount to be received after 4 years            29,900.00 Time in years                       4.00 Interest Rate 14% Looking at present value factor table in 14 % for 4 Years we get PVF                  0.5921 Amount to be deposited = 29900 * .5921            17,703.79 b) Amount to be received after 4 years            29,900.00 Time in half years = 4*2                       8.00 Interest Rate = 14%/2 7% Looking at present value factor table in 7 % for 8 half Years we get PVF                  0.5820 Amount to be deposited = 29900 * .582            17,401.80

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