Personal Finance Problems-
Read the Case in Point "A Little Becomes A Lot" in Ch. 2 of the text.
Answer the following as a team:
• If Ken really saved $0.25 per week, what return would he have had to earn over 25 years to accumulate $30,000? If you assume a more realistic return of 12% per year, how much would he have to save per week? Answer Questions 1-3 at the end of the case.
Answer the following as a team:
• Roberto has $20,000 in an investment account at his brokerage, invested to earn an expected 13% over the coming 5 years. He is buying an engagement ring for his fiancée, Sarah that costs $12,500. He is considering borrowing the cost of the ring on his credit card that charges him 18% and paying it back over 5 years. Using TVM calculations compare the direct cost of borrowing on the credit card versus the opportunity cost of selling some investments from his brokerage account.