How much do we need to have in an account to afford this if we earn 5% on our investments?

We need to spend $20,000 per year for 3 years on new restaurant equipment. How much do we need to have in an account to afford this if we earn 5% on our investments?

__________________
20,000 _________
_______ N
_______ 1/Y
CPT _______
Answer: _____________

Solutions

Expert Solution

We need to calculate the Present value (PV). Annual payment (PMT), Number of periods (N) and Interest rate (I/Y) are given.

PMT = 20,000
N = 3
I/Y = 5%
FV = 0

CPT PV

Answer : $54,464.96

jeff jeffy answered 2 years ago

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