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Develop your skills-problems and activities

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Reference no: EM132442667

Chapter 3: Questions from Develop Your Skills - Problems and Activities

1. Your mother just won $250,000 for splitting a Nobel Prize with three coworkers. If she invests her prize money in a diversified equity portfolio returning 8 percent per year, approximately how long will it take her to become a millionaire, before accounting for taxes?

2. Paul Ramos just graduated from college and landed his first "real" job, which pays $23,000 a year. In 10 years, what will he need to earn to maintain the same purchasing power if inflation averages 3 percent?

3. Calculate the future value of $5,000 earning 10 percent after 1 year, assuming annual compounding. Now, calculate the future value of $5,000 earning 10 percent after 20 years.

4. Ahmed Mustafa just turned 22 and wants to have $10,283 saved in 8 years, by his 30th birthday. Assuming no additional deposits, if he currently has $6,000 in an intermediate-term bond fund earning a 5 percent yield, will he reach his goal? If not, what rate of return is required to meet his goal?

Attachment:- Personal Finance-Assignment.rar

Reference no: EM132442667

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