d afternoon, Could you please explain why the future value factor is 100. I understand why the percentage is 9.65 When I put in my calculator (1+r)^50= 100, it doesn't come out to 100. What does future value factor mean? From my understanding I should only be concerned with figuring out what the percentage rate was which is 9.65. Thank you
d afternoon, Could you please explain why the future value factor is 100. I understand why the percentage is 9.65 When I put in my calculator (1+r)^50= 100, it doesn't come out to 100. What does future value factor mean? From my understanding I should only be concerned with figuring out what the percentage rate was which is 9.65. Thank you
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Good afternoon,
Could you please explain why the future value factor is 100. I understand why the percentage is 9.65
When I put in my calculator (1+r)^50= 100, it doesn't come out to 100. What does future value factor mean?
From my understanding I should only be concerned with figuring out what the percentage rate was which is 9.65.
Thank you
Transcribed Image Text:5.12
(1 + r) = $80,000/$35,000 = 2.2857
1+r= 2.28571/8 = 2.2857125 = 1.1089
r = .1089, or 10.89%
Only 18,262.5 Days to Retirement
You would like to retire in 50 years as a millionaire. If you have $10,000 today, what rate of
return do you need to earn to achieve your goal?
The future value is $1,000,000. The present value is $10,000, and there are 50 years until
payment. We need to calculate the unknown discount rate in the following:
$10,000 = $1,000,000/(1+r) 50
(1+r) 50 = 100
The future value factor is thus 100. You can verify that the implicit rate is about 9.65 percent.
Expert Solution
Step 1
Future value of the deposit includes the amount being deposited and amount of interest being accumulated over the period of deposit.
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