What is the value of the investment today

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You are saving up to start a new business venture and will need to accumulate $20,000. You figure you will have to work in your current job for three more years to save enough money and get more experience. You have $5,000 you can deposit now. Additionally, you will be able to deposit $3,000 at the end of each year for the next three years. ALL deposits earn 4% interest with quarterly compounding. I suggest using a time line to help with the periods. Show your work to receive partial credit.

Problem a. How much will you have at the end of the 3 years?

Problem b. If you did Part A correctly, you will find out you do not have enough money to start your company. There are at least 4 things you can do to get you can do to get you closer to this goal. (Identify and Explain the concepts behind three of them)

Problem c. You will be receiving a payment of $5,000 in three years. You feel an 8% required rate of return is appropriate. What is the value of this investment today?

Problem d. Assume your required rate of return rose from 8% in Part C to 10% due to inflation fears. How would your answer? (This is a theory answer only. Also answer is not just higher or lower. Please Explain)

Reference no: EM132802805

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