Asked by Eytan Weisz on Jun 24, 2024
Verified
Maria Gomez, an attorney, plans to replace all of her office furniture in 5 years. She estimates that the cost will be $17,000 at that time. Compute the amount that Maria should deposit today at 6% compounded annually to have the money available. (Use Tables 16-1A&B or 16-2A&B or a calculator.)
Compounded Annually
Compounded annually is an interest calculation method where the interest earned in one year is added to the principal, and the total becomes the basis for calculating the interest in the following year.
Present Value
The modern assessment of a future money total or cash flow sequence, applying a distinct rate of return.
- Ascertain the current worth of future sums to fulfill designated financial objectives.
- Utilize tables or calculators designed for financial calculations to address problems involving the time value of money.
- Determine the requisite upfront capital to achieve a predetermined financial objective in the future.
Verified Answer
SS
Sehajvir SinghJul 01, 2024
Final Answer :
0.06 ¸ 1 = 0.06; 1 ´ 5 = 5;
$17,000 ´ 0.74726 = $12,703.42 deposit today
$17,000 ´ 0.74726 = $12,703.42 deposit today
Learning Objectives
- Ascertain the current worth of future sums to fulfill designated financial objectives.
- Utilize tables or calculators designed for financial calculations to address problems involving the time value of money.
- Determine the requisite upfront capital to achieve a predetermined financial objective in the future.