136,199 views
24 votes
24 votes
How much do I have to deposit today in order to have $5000 in 5 years if interest is 8.5% compounded annually?

User Fardown
by
2.7k points

1 Answer

19 votes
19 votes

Answer:

PV= $3,402.9

Explanation:

Giving the following formula:

Future Vale (FV)= $5,000

Number of years (n) 5 years

Interest rate (i)= 8.5% compounded annually

To calculate the initial investment (PV), we need to use the following formula:

PV= FV / (1 + i)^n

PV= 5,000 / (1.085^5)

PV= $3,402.9

User Stpk
by
3.5k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.