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Present and future value
PV of $1 FV of $1 PVA of $1 FVAD of $1 FVA of $1
1 0.91743 1.09000 0.91743 1.0900 1.0000
2 0.84168 1.18810 1.75911 2.2781 2.0900
3 0.77218 1.29503 2.53129 3.5731 3.2781
4 0.70843 1.41158 3.23972 4.9847 4.5731
5 0.64993 1.53862 3.88965 6.5233 5.9847
6 0.59627 1.67710 4.48592 8.2004 7.5233
How much must be invested now at 9% interest to accumulate to $24,000 in four years?
a) $1,753.b) $1,965.c) $2,652.d) $2,317.

Respuesta :

Answer:

$ 17,002.21  (none of the options is correct)

Explanation:

The formula for determining the present value ,which is the actual amount invested to give a future value is given below:

PV=FV*(1+r)^-n

The PV is the present value which is unknown

FV is the future worth of the investment which is $24,000

r is the rate of return which is 9% per year

n is the duration of investment which is 4 years

PV=$24,000*(1+9%)^-4

PV=$24,000*(1.09)^-4

PV=$24,000*0.708425211 =$ 17,002.21  

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