This morning, TL Trucking invested $75,000 to help fund a company expansion project planned for 4 years from now. How much additional money will the firm have 4 years from now if it can earn 5 percent rather than 4 percent on its savings?
Future value = $75,000 × (1 + .05)4 = $91,162.97
Future value = $75,000 × (1 + .04)4 = $87,739.39 Difference = $91,162.97 - $87,739.39 = $3,423.58 |
30.
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You just received $225,000 from an insurance settlement. You have decided to set this money aside and invest it for your retirement. Currently, your goal is to retire 25 years from today. How much more will you have in your account on the day you retire if you can earn an average return of 10.5 percent rather than just 8 percent?
Future value = $225,000 × (1 + .105)25 = $2,730,483
Future value = $225,000 × (1 + .08)25 = $1,540,907 Difference = $2,730,483 - $1,540,907 = $1,189,576 |
31.
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You just received a $3,000 gift from your grandmother. You have decided to save this money so that you can gift it to your grandchildren 50 years from now. How much additional money will you have to gift to your grandchildren if you can earn an average of 8.5 percent instead of just 8 percent on your savings?
Future value = $3,000 × (1 + .085)50 = $177,258.95
Future value = $3,000 × (1 + .08)50 = $140,704.84 Difference = $177,258.95 - $140,704.84 = $36,554.11 |
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