What lump sum do have to invest now to accumulate

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Question 1. It is your 16th birthday. You plan to work 5 more years before retiring. Then you want to spend $200,000 for a Mediterranean cruise. What lump sum do you have to invest now to accumulate the $200,000? Assume your minimum desired rate of return is as follows.

a. 5%, compounded annually

b. 10%, compounded annually

c. 20%, compounded annually

Question 2. You want to spend $5,000 on a vacation at the end of each of the past 5 years. What lump sum do you have to invest now to take the five vacations? Assume the your minimum desired rate of return is as follows.

a. 5%, compounded annually

b. 10%, compounded annually

c. 20%, compounded annually

Reference no: EM132579990

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