A person wishes to have $27,500 cash for a new car 4 years from now. How...

A person wishes to have $27,500 cash for a new car 4 years from now. How much should be placed in an account now, if the account pays 4.2% annual interest rate, compounded weekly?

$ (Round to the nearest dollar)

Expert Solution

Present value = Future value / (1 + interest rate / compounding frequency)^{no of periods * compounding frequency}

Present value = $27,500 / (1 + 4.2% / 52)^{4 * 52}

Present value =$23,248.81 or $23,249

Amount that should be placed in an account now = $23,249

jeff jeffy answered 2 years ago

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A person wishes to have $27,500 cash for a new car 4 years from now. How...

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