Question

how much should your mom set aside and invest in a fund earning 3% compounded quarterly is she needs 85,000.00 in 20 months

Answer 1

PV= $73,201.14

Explanation:

Giving the following information:

Future value (FV)= $85,000

Number of periods (n)= 20 months

Interest rate (i)= 0.03/4= 0.0075

To calculate the lump-sum required to reach the objective, we need to use the following formula:

PV= FV / (1 + i)^n

PV= 85,000 / (1.0075^20)

PV= $73,201.14