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Chapter 21: Q.24 (page 485)

Reconsider Table 21-1, and assume that as in Problem 21-23, you wish to save enough this year to have \( 50,000 available for your planned retirement 30 years into the future. How many dollars would you have to save this year to ensure that a total amount of \) 50,000 would be accumulated 30 years into the future if the interest rate appropriate for discounting decreases to 3 percent?

Short Answer

Expert verified

$1716.73

Step by step solution

01

Given Information

Discounted value is characterized as the ongoing worth of a future amount of cash, the future amount of cash is limited at the rebate rate. Contingent on the rebate rate current worth of a future amount of cash might increment or diminish.

02

Explanation

We know,

Amount is $50000

Time = 30yrs

⇒5000030=1666.66

The discount rate for the first year is 0.926

⇒1666.660.971=1716.73

Hence $1716.73has to be saved

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Most popular questions from this chapter

Take a look at Figure 21-2. Explain why the figure implies that if the amount of accounting profit were to shrink to zero while the normal rate of return on investment remained unchanged, economic profit necessarily would become negative.

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