Question

Suppose you need to have $57,411.00 in an account 19.00 years from today and that the account pays 14.00%. How much do you have to deposit into the account 8.00 years from today?

Answer 1

You have to deposit 13584.54 dollars in 8 years in order to have 57411 dollars on your account in 19 years.

Step-by-step explanation:

In order to asses the present value of furture cash flow, we need to look at the formula for present value:

`PV=FV/(1+r)^n`

PV is Present Value, FV is future value, r is the interest rate, n is the number of years.

When we apply the numbers of the question, FV is 57411, r is 0.14 and n is 11 because we will put our deposit in 8 years and 19 - 8 is 11.

When we insert the numbers into the equation we get 13584.54

I hope this makes the answer clearer! :D