Suppose you are committed to owning a $346,000 Ferrari. If you believe your mutual fund can achieve an annual rate of return of 11.0 percent and you want to buy the car in 9 years (on the day you turn 30), how much must you invest today?
Suppose you are committed to owning a $346,000 Ferrari. If you believe your mutual fund can achieve an annual
The time value of money is the concept that money received today is worth more than the same amount received in the future due to its potential earning capacity. This is because money can be invested and earn interest over time, and as a result, has a greater value in the present than in the future. The time value of money is a fundamental principle in finance and is used in calculations such as discounted cash flow, net present value, and internal rate of return.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
