Question

Present and future value tables of $1 at 9% are presented below.

N	FV $1	PV $1	FVA $1	FVAD $1	PVA $1	PVAD $1
1	1.09000	0.91743	1.0000	1.0900	0.91743	1.00000
2	1.18810	0.84168	2.0900	2.2781	1.75911	1.91743
3	1.29503	0.77218	3.2781	3.5731	2.53129	2.75911
4	1.41158	0.70843	4.5731	4.9847	3.23972	3.53129
5	1.53862	0.64993	5.9847	6.5233	3.88965	4.23972
6	1.67710	0.59627	7.5233	8.2004	4.48592	4.88965

You want to invest $8,300 annually beginning now in order to accumulate $29,310 for a down payment on a house. If you can invest at an interest rate of 9% compounded annually, about how many years will it take to accumulate the required amount?

rev: 04_25_2020_QC_CS-209961, 07_08_2020_QC_CS-218827

Multiple Choice

• 3 years.

• 5 years.

• 4 years.

• 6 years.

Answer 1

Accumulated amount = Present value*PVAF@9%

29310 = 8300

PVAF = 29310/8300 = 3.5313

Year = 4 years

So answer is c) 4 Years