Question

You need to have $30,000 for a down payment on a house 8 in years. If you can earn an annual interest rate of 4.4 percent, how much will you have to deposit today?

Answer 1

You will have to deposit today $21,277.

Step-by-step explanation:

The excerpt is asking for the present value that you need to deposit today to have 30,000 in 8 years. The formula to calculate the present value is:

P= F/(1+i)^n

P= present value

F= future value= $30,000

n=number of years= 8

i= interest rate= 4.4%

P= $30,000/(1+0.044)^8

P= $30,000/(1.044)^8

P= $30,000/1.41

P= $21,277