Calculating present values

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Calculating Present Values. Suppose you are still committed to owning a $150,000 Ferrari. If you believe your mutual fund can achieve a 10.25 percent annual rate of return, and you want to buy the car in 10 years on the day you turn 30, how much must you invest today?9. Calculating Present Values. Suppose you are still committed to owning a $150,000 Ferrari (see Question 9). If you believe your mutual fund can achieve a 10.25 percent annual rate of return, and you want to buy the car in 10 years on the day you turn 30, how much must you invest today?

PV * (1 + .1025)^10 = $150,000 PV * (1.1025)^10 = $150,000 PV * (2.65239)= $150,000 PV = $150,000/2.65239 PV = $56,533.42

Reference no: EM13974602

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