Question

A company wants to have $20,000 at the end of a ten-year period by investing a single sum now. How much needs to be invested in order to have the desired sum in ten years, if the money can be invested at 12%? (Ignore income taxes.)

Answer 1

Answer:

8448.22

Explanation:

We are asked to calculate the present value of 20,000 in ten years.

$\frac{amount}{ {(1 + rate)}^{time} } = present \: value$

$\frac{20000}{ {(1 + 0.12)}^{10} } = 8448.22$

Resuming: in this kind of problems we are asked for which lump sum becomes a certain amount in a given period of time at an annual rate