Question

Becky wants to have $2,000 for spending money on vacation in 2 years. How much does she need to put in the bank today at 5% to have the the $2,000 in 2 years?

Answer 1

the amount that need to put in the bank today is $1,814.059

Step-by-step explanation:

The computation of the amount that need to put in the bank today i.e. present value is shown below

As we know that

Future value = Present value × (1 + rate of interest)^number of years

$2,000 = Present value × (1 + 0.05)^2

$2,000 = Present value × 1.05^2

So, the present value is $1,814.059

hence, the amount that need to put in the bank today is $1,814.059