Question

An investor wishes to have $1,000 available in five years. How much should be invested today, if the current interest rate is 5 percent (round to the nearest dollar)

Answer 1

The necessary investement today is $783.53

Step-by-step explanation:

Giving the following information:

An investor wishes to have $1,000 available in five years. The interest rate is 5%.

We need to use the following formula:

PV= FV/(1+i)^n

FV= 1000

i=0.05

n=5

PV= 1,000/(1.05)^5= $783.53