Suppose you plan to buy the Samsung Infinity phone which is scheduled to come out in...

Question

Question

Answer 1

Answer #1

Present Value = Future Value / (1 + r)ⁿ

Where Future value is $1,280

r = 10 / 100 = 0.1

n = 2 years

Present Value = $1,280 / (1+0.1)²

Present Value = $1,280 / 1.21

Present Value = $1,057.85

I must deposit a sum of $1,057.85 (at interest of 10%) to buy the amzing phone of $1,280 after 2 years.

Answer 2

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