You need to have $30,000 for a down payment on a house 8 in years. If you can earn an annual interest rate of 4.4 percent, how much will you have to deposit today?

Question

Alfredo Curry

Business

11 January, 19:37

You need to have $30,000 for a down payment on a house 8 in years. If you can earn an annual interest rate of 4.4 percent, how much will you have to deposit today?

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Answers (1)

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Jesse Bautista · Answer 1

You will have to deposit today $21,277.

Explanation:

The excerpt is asking for the present value that you need to deposit today to have 30,000 in 8 years. The formula to calculate the present value is:

P = F / (1+i) ^n

P = present value

F = future value = $30,000

n=number of years = 8

i = interest rate = 4.4%

P = $30,000 / (1+0.044) ^8

P = $30,000 / (1.044) ^8

P = $30,000/1.41

P = $21,277