Susan Wilson expects to need $79,000 for a down payment on a house in six years....

Question

Question

Susan Wilson expects to need $79,000 for a down payment on a house in six years. How much would she have to invest today in a

Answer 1

Answer #1

Present Value = Future Value / ( 1 + Discount rate)^^{number of periods}

Future Value = Initial Investment * ( 1 + Interest rate)^^{number of periods}

Using these:

Future Value = $ 79000

years = 6 years

Discount rate = 6.25%

Present Value = 79000 / (1 + 6.25%)^⁶

Present Value = 79000 / 1.438711226

Present Value = $ 54910.25

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Answer 2

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