Question

ou need to have $25,000 for a down payment on a house 5 in years. If you can earn an annual interest rate of 4.7 percent, how much will you have to deposit today

Answer 1

$19,870.39

Step-by-step explanation:

To find the amount that you will have to deposit today, you have to use the formula to calculate the present value:

PV=FV/(1+i)^n, where

PV= Present value

FV= Future value=$25,000

i= interest rate=4.7%

n= number of periods of time= 5 years

PV=25,000/(1+0.047)^n

PV=25,000/(1.047)^5

PV=19,870.39

According to this, the answer is that you will have to deposit today $19,870.39.