Question

Katlyn needs to invest $5,318 today for her savings account to be worth $8,000 six years from now. which one of the following terms refers to the $5,318?

a. Future value
b. compound value
c. complex value
d. Present value
e. Factor value

Answer 1

The correct term that refers to the $5,318 is present value. Present value is the current worth of a future sum of money or stream of cash flows given a specific interest rate. In financial calculations, the present value is commonly used to evaluate investments and determine the amount of money needed to achieve a desired future value.

Step-by-step explanation:

The correct term that refers to the $5,318 is present value.

Present value is the current worth of a future sum of money or stream of cash flows given a specific interest rate. In this case, the present value is the initial investment of $5,318 that Katlyn needs to make today in order to achieve a future value of $8,000 after six years.

In financial calculations, the present value is commonly used to evaluate investments and determine the amount of money needed to achieve a desired future value.