Question

Suppose you want to have $ 20,000 saved in 11 years. If you can earn4.29% annually on your funds, how much would you have to invest today to the nearest whole number to reachyour goal?O $12,659O $12,600O $ 12,400O $12,510

Answer 1

Step 1

Given; Suppose you want to have $ 20,000 saved in 11 years. If you can earn

4.29% on your funds.

Required; how much would you have to invest today to reach

your goal?

Step 2

The future value formula is given as;

`FV=PV(1+r)^n`
`\begin{gathered} FV=20000 \\ r=(4.29)/(100)=0.0429 \\ n=11 \end{gathered}`
`20000=PV(1+0.0429)^(11)`
`\begin{gathered} PV=(20000)/((1.0429)^(11)) \\ PV=12599.71302 \\ PV\approx\text{ \$12600} \end{gathered}`

Answer; The present value or PV is;

`PV=\text{\$12600}`