Question

P5.3      Present Value. Suppose you want to deposit a certain amount of money into a savings account and then leave it alone to draw interest for the next 10 years. At the end of 10 years you would like to have $10,000 in the account. How much do you need to deposit today tomake that happen? You can use the following formula, which is known as the present value formula, to find out:

P = F/(1+r)^n

The terms in the formula are as follows:

P is the present value, or the amount that you need to deposit today.

F is the future value that you want in the account. (In this case, F is $10,000.)

r is the annual interest rate.

n is the number of years that you plan to let the money sit in the account.

Write a program that has a function named presentValue that performs this calculation. The function should accept the future value, annual interest rate, and number of years as arguments. It should return the present value, which is the amount that you need to deposit today. Demonstrate the function in a program that lets the user experiment with different values for the formula’s terms.

C:\Windows\system32\cmd.exe What is the desired future value of the account? 10000 What is the annual interest rate? 0.035 hat is the annual interest rate? 8.835 For how many years will the money sit in the account? 5 You need to deposit $8419.73 lant to try another set of values? 〈y = yes): y What is the desired future value of the account? 10000 What is the annual interest rate? 0.045 hat is the annual interest rate? 8.845 For how many years will the money sit in the account? 5 You need to deposit $8024.51. lant to try another set of values? 〈y = yes): n ress any key to continue . . .

C++

Answer 1

#include <iostream.h>
#include <math.h>

using namespace std;

double presentValue(double fValue, double rate, int yrs);

int main()
{
   double fValue, rate, pValue;
   int yrs;
   char ch;
   do {
       cout << "What is the desired future value of the account? ";
       cin >> fValue;
       cout << "What is the annual interest rate? ";
       cin >> rate;
       cout << "For how many years will the money sit in the account? ";
       cin >> yrs;
       pValue = presentValue(fValue, rate, yrs);
       cout << "You need to deposit: $" << pValue << endl << endl;
       cout << "Want to try another set of values? (y = yes): ";
       cin >> ch;
   }while(ch == 'y' || ch == 'Y');
   return 0;
}

double presentValue(double fValue, double rate, int yrs)
{
   double pValue;
   pValue = fValue / pow((1 + rate), yrs);
   return pValue;
}

Sample output: