How much must be deposited today in an account earning 6% annually to accumulate a 20%...

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How much must be deposited today in an account earning 6% annually to accumulate a 20%...

How much must be deposited today in an account earning 6% annually to accumulate a 20% down payment to use in purchasing a car one year from now, assuming that the car's price one year from now is $20,800?

Select one:

a. $3,782

b. $3,774

c. $4,080

d. $3,925

business finance

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Answer 1

Answer #1

Amount Required after 1 Year = Price * down {ayment %

= $ 20800 * 20%

= $ 4160

FV = PV (1+r)^n

$ 4160 = PV ( 1 + 0.06)^1

PV = $ 4160 / 1.06

= $ 3925

OPtion D is correct

Pls comment, if any further assistance is required

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Answer 2

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