Question

You want to have $13,000 in 9 years for a dream vacation. If you can earn an interest rate of .4 percent per month, how much will you have to deposit today?

Answer 1

PV= $8,447

Step-by-step explanation:

Giving the following information:

Future value= $13,000

Number of months= 9*12= 108

Interest rate= 0.4/100= 0.004 compounded montlhy

To calculate the initial investment required, we need to use the following formula:

PV= FV/(1+i)^n

PV= 13,000/(1.004^108)

PV= $8,447