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# You have to pay \$16,000 a year in school fees at the end of each of

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You have to pay \$16,000 a year in school fees at the end
of each of the next ten years. If the interest rate is 12%,
how much do you need to set aside today to cover these
bills? (Do not round intermediate calculations. Round your
You have invested \$160,000 at 12%. After paying the
above school fees, how much would remain at the end of
the ten years? (Do not round intermediate calculations.
Solution
1)
PV of school fees
= 16000 * [1-(1+0.12)^-10]/0.12
= 90403.57
2)
FV of school fees = 16000 * [(1.12)^10 -1]/0.12
= 280779.7611
FV of investment = 160000 * (1+0.12)^10 = 496935.7133
amount remaining = 496935.7133 - 280779.7611

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You have to pay \$16,000 a year in school fees at the end of each of the next ten years. If the interest rate is 12%, how much do you need to set aside today to cover these bills? (Do not round intermediate calculations. Round your answer to 2 decimal places.) You have invested \$160,000 at 12%. After paying the above school fees, how much would remain at the end of the ten years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Solution 1) PV of school fees = 16000 * [1-(1+0.12)^-10]/0.12 = 90403.57 2) FV of school fees = 16000 * [(1.12)^10 -1]/0.12 = 280779.7 ...
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