Homework Answers
Solution: 1569
Working:
1) Given: FV = $872; n =2; i = 8%
PV = ?
FV = PV (1 + R/100)^n
872 = PV ( 1 + 0.08)^2
PV = 872 / 1.1664 = 747.6
2) Given: FV = $1407; n =7; i = 8%
PV = ?
FV = PV (1 + R/100)^n
1407 = PV ( 1 + 0.08)^7
PV = 1407 / 1.7138 = 820.97
Thus total amount to be saved today = 747.6 + 820.97 = 1569
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