8-16. A woman desires to have $400,000 in a savings account when she retires in 20 years. Because of the effects of inflation on spending power, she stipulates that her future "nest egg" will be equivalent to $400,000 in today's purchasing power. If the expected average inflation rate is 7% per year and the savings account earns 5% per year, what lump-sum amount of money should the woman deposit now in her savings account? (8.2)

8-16. A woman desires to have $400,000 in a savings account when she retires in 20 years. Because of the effects of inflation on spending power, she stipulates that her future "nest egg" will be equivalent to $400,000 in today's purchasing power. If the expected average inflation rate is 7% per year and the savings account earns 5% per year, what lump-sum amount of money should the woman deposit now in her savings account? (8.2)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8-16. A woman desires to have $400,000 in a savings
account when she retires in 20 years. Because of the
effects of inflation on spending power, she stipulates
that her future "nest egg" will be equivalent to
$400,000 in today's purchasing power. If the expected
average inflation rate is 7% per year and the savings
account earns 5% per year, what lump-sum amount of
money should the woman deposit now in her savings
account? (8.2)

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