You want to have $32,000 for a down payment on a house 5 years from now.If you can earn 4.3 percent, compounded annually on your savings, how much do you need to deposit today to reach your goal?
A)$25,925.58
B)$28,179.77
C)$21,639.73
D)$21,970.21
E)$24,625.44

Question

Quizplus · Accepted Answer

To find the present value needed to reach a future value of $32,000 in 5 years at an annual interest rate of 4.3%, we use the formula: PV = FV / (1 + r)^n. Plugging in the values: PV = $32,000 / (1 + 0.043)^5 = $32,000 / 1.234665 = $25,925.58.

You Want to Have $32,000 for a Down Payment on a House