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Draw a time line




SOLUTION STRATEGY;STEPS;1. Draw a time line;2. Identify the values;a. Present value;b. Interim payments (ordinary annuity/annuity due);c. Future value;d. Discount rate/Interest rate / Required rate of return;e. Period of investment;3. Use your financial calculators for computation;QUESTION;Ms. Early Saver has decided to invest $1,000 at the end of each year for the next 10 years, and then she will just let the amount compound for 40 additional years. Her brother, Late Saver, has a different investment program: He will invest nothing for the next 10 years, but will invest $1,000 per year (at the end of each year) for the following 40 years. If we assume an 8 percent rate of return, compounded annually, which investment program will be worth more 50 years from now?;Calculate the value of the investment if Ms. Early Saver and her brother, Late Saver, make the $1000 investment per year in the beginning of each year.


Paper#30490 | Written in 18-Jul-2015

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