Final answer:
To find the present value of the savings plan, calculate the present value of each deposit using the formula PV = PMT / (1 + r)^n. Then, sum up the present values of each deposit. The present value of this savings plan is $813.63.
Step-by-step explanation:
To find the present value of this savings plan, we need to calculate the present value of each deposit and then sum them up.
The present value of each deposit can be calculated using the formula:
PV = PMT / (1 + r)^n
Where PV is the present value, PMT is the payment amount, r is the interest rate, and n is the number of periods.
In this case, the payment amount is $210, the interest rate is 9% (or 0.09), and the number of periods is 5.
Using the formula, we can calculate the present value of each deposit:
Year 1:
PV = 210 / (1 + 0.09)^1 = $192.66
Year 2:
PV = 210 / (1 + 0.09)^2 = $175.93
Year 3:
PV = 210 / (1 + 0.09)^3 = $160.97
Year 4:
PV = 210 / (1 + 0.09)^4 = $147.85
Year 5:
PV = 210 / (1 + 0.09)^5 = $136.22
Finally, we can sum up the present values of each deposit to find the present value of the savings plan:
Present Value = $192.66 + $175.93 + $160.97 + $147.85 + $136.22 = $813.63
Therefore, the present value of this savings plan is $813.63.