Answer:
The lum sum that must be deposited today is $12,506.25 to have a future value of $25,000 in 9 years if the funds carn 8%, compounded annually.
Step-by-step explanation:
We are given:
Future value (A)=$25,000
Rate r =8% (0.08%)
Time t = 9
Compounded Annually n =1
We need to find:
Principal Amount (P) = ?
The formula used will be:
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
Putting values and finding Principal Amount (P)
[tex]A=P(1+\frac{r}{n})^{nt}\\25000=P(1+\frac{0.08}{1})^{9*1} \\25000=P(1+0.08)^{9} \\25000=P(1.08)^{9} \\25000=P(1+0.08)^{9} \\25000=P(1.9990)\\P=\frac{25000}{1.9990}\\\mathbf{P=12506.25 }[/tex]
So, The lum sum that must be deposited today is $12,506.25 to have a future value of $25,000 in 9 years if the funds carn 8%, compounded annually.
