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Money that meals for the homeless invests

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Paula Morduch is considering purchasing a new van for Meals for the Homeless. She expects to buy the van for $50,000 four years from today. Solve the following using a calculator or spreadsheet.

a. If she can invest money at 5 percent compounded quarterly, how much must she invest today?

b. Suppose that Morduch believes that Meals for the Homeless can put aside only $37,500 today to buy the new van in 3 years. 5-21. However, she thinks that she can invest the money at 7.20 percent compounded monthly. Determine if she will have the $50,000 she will need for the new van. c. Assuming that Morduch can put aside $37,000 today and needs to have $50,000 available in 4 years, what interest rate must be earned? Use quarterly compounding. d. Assume that Morduch believes that she can earn only 6 percent per year on the money that Meals for the Homeless invests. Assuming monthly compounding, how much must be put aside today to provide $50,000 in 4 years?

Reference no: EM132460035

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