Assume you are currently aged twenty (20) and your parents inform you that they are planning to give you $100,000 on your 30th birthday (10 years from now).
Assume you are currently aged twenty (20) and your parents inform you that they are planning to give you $100,000 on your 30th birthday (10 years from now). If the relevant discount rate is 5%,how much is your gift worth today? Provide complete calculations in your answer. (5 Marks)
b. Assume you have $20,000 in your bank account. After five (5) years, you are intending to have $35,000 in your account. What annual rate of return must you earn on your investment to achieve your target? Provide complete calculations in your answer. (5 Marks)
b. Assume you have $20,000 in your bank account. After five (5) years, you are intending to have $35,000 in your account. What annual rate of return must you earn on your investment to achieve your target? Provide complete calculations in your answer. (5 Marks)
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