Signs (PV) 1. You want to have this amount at the end 913 Your money will...

	Signs (PV)


1. You want to have this amount at the end		913
Your money will be invested this number of years		14
You will invest this amount each year		29
The rate you will earn each year is this		4.6%
How much should you start your investment with, today?
A Between 50.00 and 200.00
B Between 200.00 and 250.00
C Between 250.00 and 300.00
D Between 300.00 and 500.00

Expert Solution

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=29[(1.046)^14-1]/0.046

=29*19.0632736

=552.834934

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence A=deposit at beginning*(1.046)^14

Required future value=Future value of annuity+Deposit at beginning*(1.046)^14

913=552.834934+Deposit at beginning*(1.046)^14

Deposit at beginning=(913-552.834934)/(1.046)^14

=$191.89(Approx)

Hence the correct option is:

Between 50.00 and 200.00

jeff jeffy answered 2 years ago

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