Question

1) Find the lump that must be deposited today to have a future value of $ 25,000 in 5 years if funds earn 6 % componded annually.

Answer 1

Answer: $ 18681.45

Explanation:

Given: Future value :
`FV=\$25,000`

The rate of interest :
`r=0.06`

The number of time period :
`t=5`

The formula to calculate the future value is given by :-

`\text{Future value}=P(1+i)^n`, where P is the initial amount deposited.

`\Rightarrow\ 25000=P(1+0.06)^5\\\\\Rightarrow\ P=(25000)/((1.06)^5)\\\\\Rightarrow\ P=18681.4543217\approx=18681.45`

Hence, the lump that must be deposit today : $ 18681.45