Your older sister deposited $50,000 today at 14 percent interest for 12 years. You would like to have just as much money at the end of the next 12 years as your sister will have. However, you can only earn 12 percent interest. How much more money must you deposit today than your sister did if you are to have the same amount at the end of the 12 years?   Question 15 options:   9,863   10,458   7,120   8,321   11,832

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
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Your older sister deposited $50,000 today at 14 percent interest for 12 years. You would like to have just as much money at the end of the next 12 years as your sister will have. However, you can only earn 12 percent interest. How much more money must you deposit today than your sister did if you are to have the same amount at the end of the 12 years?

 

Question 15 options:

 

9,863

 

10,458

 

7,120

 

8,321

 

11,832

Expert Solution
Step 1

Sister:

Present value = pvs = $50,000

Interest rate = rs = 14%

Time = ts = 12 years

You:

Present value = pvy = ?

Interest rate = ry = 12%

Time = ty = 12 years

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