You want to have $45,000 in cash to buy a car 4 years from today. you expect to earn 4.5 percent, compounded annually, on your s
avings. how much do you need to deposit today if this is the only money you save for this purpose?
1 answer:
The formula is
A=p (1+r)^t
A future value 45000
P present value?
R interest rate 0.045
T time 4years
We need to solve for p
P=A÷(1+r)^t
P=45,000÷(1+0.045)^(4)
P=37,735.26
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