question archive Quantitative Problem 1: You deposit $1,700 into an account that pays 3% per year
Quantitative Problem 1: You deposit $1,700 into an account that pays 3% per year
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Quantitative Problem 1: You deposit $1,700 into an account that pays 3% per year. Your plan is to withdraw this amount at the end of 5 years to use for a down payment on a new car. How much will you be able to withdraw at the end of 5 years? Round your answer to the nearest cent. Do not round intermediate calculations.
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Quantitative Problem 2: Today, you invest a lump sum amount in an equity fund that provides an 8% annual return. You would like to have $12,500 in 6 years to help with a down payment for a home. How much do you need to deposit today to reach your $12,500 goal? Round your answer to the nearest cent. Do not round intermediate calculations.
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1).
Future value, FV = PV * (1+i)n
Future value, FV = $ 1700*(1+0.03)5
Future value, FV = $ 1,970.77
2).
Present value = FV / (1+i)n
Present value = $ 12500 / (1+0.08)6
Present value = $ 7,877.12
