Question

You will require $700 in 5 years. If you earn 5% interest on your funds, how much will you need to invest today in order to reach your savings goal

Answer 1

PV= $548.47

Step-by-step explanation:

Giving the following information:

You will require $700 in 5 years. You earn 5% interest on your funds.

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

PV= FV/(1+i)^n

PV= present value

FV= future value

n= number of years

i= interest rate

PV= 700/(1.05^5)

PV= $548.47