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Wewaii [24]
3 years ago
6

Jane Roznowski wants to invest some money now to buy a new tractor in the future. If she wants to have ​$250,000 available in 6

​years, how much does she need to invest now in a CD paying 4.65​% interest compounded monthly​?
Business
1 answer:
Ksju [112]3 years ago
5 0

Answer:

Present Value= $189,236.98

Explanation:

Giving the following information:

Future value= ​$250,000

Number of years= 6

Interest rate= 4.65​% compounded monthly​

First, we need to calculate the real interest rate:

Interest rate= 0.0465/12= 0.003875

Now, using the following formula, we can calculate the initial inventment:

PV= FV/ (1+i)^n

n= 6*12= 72

PV= 250,000/(1.003875^72)

PV= $189,236.98

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