Ten years ago, Hailey invested $2,000 and locked in a 9 percent annual interest rate for 30 years (ending 20 years from now). Aidan can make a 20-year investment today and lock in a 10 percent interest rate. How much money should he invest now in order to have the same amount of money in 20 years as Hailey?
Ten years ago, Hailey invested $2,000 and locked in a 9 percent annual interest rate for 30 years (ending 20 years from now). Aidan can make a 20-year investment today and lock in a 10 percent interest rate. How much money should he invest now in order to have the same amount of money in 20 years as Hailey?
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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Ten years ago, Hailey invested $2,000 and locked in a 9 percent annual interest rate for 30 years (ending 20 years from now). Aidan can make a 20-year investment today and lock in a 10 percent interest rate.
How much money should he invest now in order to have the same amount of money in 20 years as Hailey?
Expert Solution
Step 1
Hailey's investment (H) = $2000
Interest rate (r) = 9%
n = 30 years
Let the amount Aidan invests today = A
Interest rate (i) = 10%
m = 20 years
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