Question

If you want to have $18,000 in four years, how much do you have to deposit today if your investment earns a rate of 3 percent per annum?

Answer 1

Amount to be deposited = future value * (1+r)^(-n)

Here

 

Future value = $18,000

r = 3% ⇒ 0.03.

n = 4 years.

 

Amount to be deposited = $18,000*(1.03)^(-4)

⇒ $18,000*0.888

⇒ $15,984.00.

 

The amount to be deposited is will be $15,984.00.

 

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The amount to be deposited is will be $15,984.00.