2. FACTS: I have just received an inheritance. I’m thinking of investing some it in an account to be used to pay for my daughter’s college tuition some time in the future. I estimate that I’ll need $110,000 in 10 years. REQUIRED: Calculate how much I’ll need to invest now so that my initial deposit grows to become $110,000. Assume an 11% rate of return.
3. FACTS: You just received an unexpected graduation gift: $2,000! You want to be smart with this money and decide to invest it so that you can use it as a downpayment when buying a house some time in the future. You think you’ll be ready to settle down and buy a house in 5 years. REQUIRED: Calculate how much this one-time deposit will be worth in 5 years assuming your investment earns 8% annually.