Melanie needs to make some house repairs in five years that will cost $9,000. She has...
Melanie needs to make some house repairs in five years that will cost $9,000. She has some money in an account earning 7% annual interest. How much money needs to be in the account today so she will have enough to pay for the repairs?
a. $7,347
b. $5,978
c. $6,866
d. $5,880
e. $6,417
What are the steps to get to this answer?
Homework Answers
Ans e. $ 6417
| FV = | Future Value |
| PV = | Present Value |
| r = | rate of interest |
| n= | no of period |
| PV = | FV/ (1 + r )^n |
| PV = | 9000 / ((1 + 7%)^5) |
| PV = | 6417 |
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