Think of something you want or need for which you currently do not have the fund

Question

Think of something you want or need for which you currently do not have the funds. It could be a vehicle, boat, horse, jewelry, property, vacation, college fund, retirement money, or something else. Pick something which cost somewhere between $2000 and $50,000.

On page 270 of Elementary and Intermediate Algebra you will find the “Present Value Formula,” which computes how much money you need to start with now to achieve a desired monetary goal. Assume you will find an investment which promises somewhere between 5% and 10% interest on your money and you want to purchase your desired item in 12 years. (Remember that the higher the return, usually the riskier the investment, so think carefully before deciding on the interest rate.)

State the following in your discussion:

The desired item

How much it will cost in 12 years

The interest rate you have chosen to go with from part b

Set up the formula and work the computational steps one by one, explaining how each step is worked, especially what the negative exponent means. Explain what the answer means.

Does this formula look familiar to any other formulas you are aware of? If so, which formula(s) and how is it similar?

Incorporate the following five math vocabulary words into your discussion. Use bold font to emphasize the words in your writing (Do not write definitions for the words; use them appropriately in sentences describing your math work.):

Power

Reciprocal

Negative exponent

Position

Rules of exponents

Explanation / Answer

consider this example u can understand more.

One day I plan to purchase my own property with the help of mathematics I can accomplish this plan, if I stay on top of it. However, I have tried to save but somehow I spend. What I come to realize is by investing what I have I can have all that I need within 10-12 years, then I can have the home of my dream. However, the way property value has appreciated after 10 years the price will double.

If I want to purchase a property worth $40,000 In 12 years from now it would more than likelycost me around $80,000 being that the cost of living not only living has gone up and will more than likely keep rising. So with this being the case I have to invest wisely as well as plan which can expand to 80, 000 within 12 years.

Being that I love to research and looking for a legitcompany I found one who is offering 12% per annum compound interest on my investment I wish to purse.

The formula which I estimated the amount to be invested for the property will be utilized is

Compound interest formula which is giving here.

FV = PV (1 + r)n

Here PV represents present value of investment

FV represents future value to be received at end of period

n represents the number of periods and r   represents the rate of interest available.

Being that I have the values FV,r andn   I can now solve the formula to get the value of PV.

We get                

FV = PV(1+ r)n

Multiply both sides by the reciprocal of (1+ r)n

FV * 1/ (1+ r)n = PV*(1+ r)n*1/(1+ r)n

PV = FV / (1+ r)n

Using rules of exponent - we can take the denominator term in the numerator, as well as the, n   will become negative exponent.    The parenthesis (1 + r) will be raised to power-n.   

Then we get the following:

PV = (1 + r)-n

Substituting the values

PV = 80000 (1 + 0.12)-12

PV = 80000(1.12)-12

PV = 80000(0.256675)

PV = 20534.01

With this being my desire I must invest $20,534.10    approximately which will help with the purchasing of the property I wish to obtain that will be worth $80,000 at the end of 12 years.

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