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You need $35,000 in cash to buy a car 15 years from today. You expect to earn 14 percent, compounded annually, on your savings. How much do you need to deposit today if this is the only money you save for this purpose

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facundobuzzetti

Answer:

PV= $4,903.38

Explanation:

Giving the following information:

FV= $35,000

n= 15 years

i= 14% compounded annually

To calculate the initial investment required, we need to use the following formula:

PV= FV/(1+i)^n

PV= present value

FV= future value

i= interest rate

n= number of years

PV= 35,000/(1.14^15)

PV= $4,903.38

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