Suppose you start saving today for a $40,000 down payment that you plan to make on...

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Question

Suppose you start saving today for a $40,000 down payment that you plan to make on a house in 5 years. Assume that you make n

Answer 1

Answer #1

We use the formula:
A=P(1+r/365)^365n
where
A=future value
P=present value
r=rate of interest
n=time period.

40,000=P*(1+0.07/365)^(365*5)

P=40,000/(1+0.07/365)^(365*5)

=40,000*0.704711738

=$28188.47(Approx)

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Answer 2

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