1: Sarah Wiggum would like to make a single investment and have $2 million at the time of her retirement in 35 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah have to invest today? What if Sarah were a finance major and learned how to earn a 14 percent annual return? How soon could she then retire?

Using an excel spreadsheet I plugged in =PV(rate,nper,pmt,fv) with values that’s =PV(0.04,35,0,2000000)
A. Sarah needs to invest ($506,830.94) today in order to receive $2,000,000 in 35 years.
If Sarah earned an annual return of 14 percent, how soon could she then retire?
I plugged into Excel the formula =NPER9rate,pmt,pv,fv) and with values that’s =NPER(0.14,0,-506,830.94,2,000,000)
B. If Sarah invests $506,830.94 today at 14 percent compounded annually, it will take about 3 years for $506,830.94 to grow to $2,000,000.

2: What is the future value of each of the following streams of payments?
Using the Excel spreadsheet, I used the formula =FV(rate,nper,pmt,pv) $500 a year for 10 years compounded annually at 5 percent =FV(0.05,10,-500,0) = $6,288.95 $100 a year for 5 years compounded annually at 10 percent =FV(0.10,5,-100,0) = $610.51 $35 a year for 7 years compounded annually at 7 percent =FV(0.07,7,-35,0) = $302.89 $25 a year for 3 years compounded annually at 2 percent =FV(0.02,3,-25,0) = $76.51

3: The owner of the Crusik Distribution Company is evaluating the expected annual sales for a new line of facial care products and estimates that there is a 50 percent chance that the product line will be extremely successful, in which case it will generate sales next year of $5 million. However, because the new product line has a unique appeal that will require substantial advertising by its manufacturer to gain consumer acceptance, there is a 50 percent chance that revenues