Value of Money

Value of Money Discussion Work out how many years (10) to go before you retire, now
look back the same number of years, and see how much the dollar has fallen in
value from then to now The US Government has the statistics

1 Why take a risk with your money?

2 Find the interest paid on risk-free US Government 5 year bonds and pretend you want to invest $10,000

3 Find the current rate of inflation

4 Your tax bracket is 40% at the end of one year how much will you have made or lost?

Today you open an account with a $12,800 deposit that earns 1290% compounded annually You’ve set a target for the account so that in exactly 10 years its balance will be $58,100

To reach the target you’ll adjust the balance annually; each year’s adjustment will be exactly the same amount and the first adjustment occurs exactly one year from now

After the last annual adjustment in exactly 10 years, and crediting of that year’s interest, the account balance exactly equals the target Describe the annual adjustment that you make each year


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