You Want to Save $200 a Month for the Next

question 86

Multiple Choice

You want to save $200 a month for the next 24 years and hope to earn an average rate of return of 11 percent.How much more will you have at the end of the 24 years if you invest your money at the beginning of each month rather than the end of each month?

• A)$1,611.29
• B)$1,807.70
• C)$2,238.87
• D)$2,569.14
• E)$2,707.27

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Definitions:

NPV

Net Present Value - a calculation used to assess the profitability of a project or investment by summing the present values of all cash flows associated with it.

IRR

Internal rate of return. A capital budgeting technique that rates projects according to their expected return on invested funds. The higher the return the better.

MIRR

Modified Internal Rate of Return (MIRR) is a financial metric that evaluates the profitability of investments, adjusting the internal rate of return (IRR) to account for the reinvestment of cash flows at a different rate.

Present Value

The current value of a future amount of money or stream of cash flows, discounted at a certain interest rate.