Revision as of 19:47, 4 December 2023 by Admin (Created page with "The future value of the investments equal: 1.055 × ($10,000/0.055 )(1 − 1/1.055<sup>10</sup> ) × (1.055)<sup>10</sup> = $135, 835 (end of year 10) And the purchasing power, in today's dollars, equals: $135,835/1.02<sup>10</sup> = $111, 432 '''References''' {{cite web |url=https://alo.mit.edu/wp-content/uploads/2015/06/PS_Part1.pdf |last1=Lo |first1=Andrew W. |last2 = Wang | first2 = Jiang |website=alo.mit.edu | title = MIT Sloan Finance Problems and Solutions Co...")
Exercise
Dec 04'23
Answer
The future value of the investments equal:
1.055 × ($10,000/0.055 )(1 − 1/1.05510 ) × (1.055)10 = $135, 835 (end of year 10)
And the purchasing power, in today's dollars, equals:
$135,835/1.0210 = $111, 432
References
Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.