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den301095 [7]
3 years ago
7

The amount a person would have to deposit today (present value) at an interest rate of 5 percent to have $1,000 five years from

now.
Business
1 answer:
ad-work [718]3 years ago
8 0

Answer:

The amount a person has to deposit today for it to be $1000 in 5 years at 5% is $783.52

Explanation:

We need to calculate what amount deposited today and compounded at 5% per year would add up to $1000 1 year from now, for that we will have to discount $1000 by 5% and 5 years using this formula.

PV= FV/(1+Interest rate)^N

FV= 1,000

Interest rate = 5%

N= 5

PV= 1,000/(1.05)^5

PV = 783.52

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