Calculating Future Values. Go to www.dinkytown.net and follow the "Savings Calculator"
link. If you currently have $10,000 and invest this money at 9 percent, how much will you have in 30
years? Assume you will not make any additional contributions. How much will you have if you can earn 11
percent?
4.2
Calculating the Number of Periods. Go to www.dinkytown.net and follow the "Cool Million" link. You
want to be a millionaire. You can earn 11.5 percent per year. Using your current age, at what age will
you become a millionaire if you have $25,000 to invest, assuming you make no other deposits (ignore
inflation)?
4.3
Calculating the Number of Periods. Go to www.financecenter.com/consumertools and follow the
"Calculators" link and find the "How much, at what rate, when?" calculator. You want
to buy a Lamborghini Murciélago. Assume the price of the car is $330,000 and you have $35,000. If
you can earn an 11 percent return, how long must you wait to buy this car (assuming the price stays the
same)?
4.4
Calculating Rates of Return. Use the FinanceCenter
calculator to solve the following problem. You still want to buy the Lamborghini Murciélago, but
you have $60,000 to invest and want to buy the car in 15 years. What interest rate do you have to earn to
accomplish this (assuming the price stays the same)?
4.5
Future Values and Taxes. Taxes can greatly affect
the future value of your investment. The Financial Calculators Web site at www.fincalc.com has a
financial calculator that adjusts your return for taxes. Find the "How long until my savings reach
my goal?" link on this page to find this calculator. Suppose you have $50,000 to invest today. If
you can earn a 12 percent return and no additional annual savings, how much will you have in 20 years?
(Enter 0 percent as the tax rate.) Now, assume that your marginal tax rate is 27.5 percent. How much will
you have at this tax rate?
