1. A recently graduated mechanical engineer wants to build a reserve fund as a safety net to pay his expenses in the unlikely event that he is without work for a short time. His aim is to have $15,000 developed over the next 3 years, with the proviso that the amount has the same purchasing power as $15,000 today. If the expected market rate on investments is 8% per year and inflation is averaging 2% per year, find the annual amount necessary to meet his goal.

The annual amount necessary to meet his goal is $6,049

Explanation:

In order to calculate the the annual amount necessary to meet his goal, first we have to calculate the Inflation adjusted interest rate with the following equation:

Inflation adjusted interest rate = (1+8%)*(1+2%) - 1

Inflation adjusted interest rate = 10.16%

Therefore, to calculate the the annual amount necessary to meet his goal (P) we shall use the following formula:

$15,000 = P*(1-1/1.1016^3)/0.1016

P = $15,000/((1-1/1.1016^3)/0.1016)

P =$6,049

The annual amount necessary to meet his goal is $6,049

it's actually a very difficult task, due to not many people can make 2 million dollars in 2 years. besides that, to the not-so-realistic ideas, you can create a business. it could be practically anything, but make it into a business that isn't that known yet, you get me? also, lets not forget about stock market. that's where all the good stuff happens. use investments at the beginning and begin to raise up your business or whatever you're going to do. as this is a very non-realistic idea, it's still worth the shot!

answer; societal marketing;