Question

Cheryl wants to have $2,000 in

spending money to take on a
trip to Disney World in three
years. How much must she
deposit now in a savings
account that pays 5% to have
the money she needs in three
years?

Answer 1

$1, 727.68

Step-by-step explanation:

Cheryl wants to have $2000 three years from now in an account that pays 5%

The $2000 is equivalent to the Future value when applying the compound interest formula. The present value is the amount she needs to invest now.

Fv= PV (1+5/100)^3

$2000 = PV(1+0.05)^3

$2000 =Pv 1.157625

Pv = $2000/1.157625

Pv= 1,727.68

Cheryl has to invest $1, 727.68