Question

plan to buy a time-share in six years of $16,860. In order to have adequate funds to do so, the Walker want to make a deposit to their money market fund today. Assume that they will be able to earn an investment rate of 5.75%, compounded annually. How much will James and Rachel need to deposit today to achieve their goal

Answer 1

Initial investment= $12,055.22

Step-by-step explanation:

Giving the following information:

Future Value (FV)= $16,860

Number of periods (n)= 6 years

Interest rate (i)= 5.75% = 0.0575

To calculate the initial investment (PV), we need to use the following formula:

PV= FV / (1 + i)^n

PV= 16,860 / (1.0575^6)

PV= $12,055.22