Author Question: You have 5,000 in an index mutual fund. At an average annual rate of return of 10 per year, this ... (Read 71 times)

nevelica · **on:** Jul 10, 2018

You have 5,000 in an index mutual fund. At an average annual rate of return of 10 per year, this investment should exceed a value of 500,000 by the time you retire in 40 years.

Indicate whether the statement is true or false.

Question 2

You win the 5,000,000 lottery that pays you 250,000 per year over a 20-year period. Given negative interest rates, the lottery has a present value that is less than 5,000,000.

Indicate whether the statement is true or false.

bulacsom · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: FALSE
Explanation: FV = PV (1 + r)n = 5,000 (1.1)40 = 226,296.28.

Answer to Question 2

Answer: FALSE
Explanation: You win the 5,000,000 lottery that pays you 250,000 per year over a 20 year period. Given negative interest rates, the lottery has a present value that is GREATER than 5,000,000.

nevelica · **Reply #2 on:** Jul 10, 2018

Thank you

bulacsom · **Reply #3 on:** Jul 10, 2018

No problemo

Author Question: You have 5,000 in an index mutual fund. At an average annual rate of return of 10 per year, this ... (Read 71 times)

nevelica

You have 5,000 in an index mutual fund. At an average annual rate of return of 10 per year, this ...

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