Calculation of present value of money:
We are given that you need $35,000 for a down payment on a house in six years, we need to find the amount of money that you must invest today at 7% interest compounded annually to achieve your goal.
We can calculate the present value using the following formula:
Present value = Future value * Present value of $1
Hence future value is $35,000 and Present value of $1 (7%, 6 years) shall be 0.66634 (Please refer to the present value of $1 table)
Hence,
Present value = 35000*0.66634 = 23,321.98
Hence, you must invest $23,321.98 today at 7% interest compounded annually to achieve your goal.