Question

find the lump sum that must be deposited today to have a future value of $25,000 in 9 years if the funds carn 8%, compounded annually. Use the table of values below.

Answer 1

Answer:

The lum sum that must be deposited today is $12,506.25 to have a future value of $25,000 in 9 years if the funds carn 8%, compounded annually.

Step-by-step explanation:

We are given:

Future value (A)=$25,000

Rate r =8% (0.08%)

Time t = 9

Compounded Annually n =1

We need to find:

Principal Amount (P) = ?

The formula used will be:

$A=P(1+\frac{r}{n})^{nt}$

Putting values and finding Principal Amount (P)

$A=P(1+\frac{r}{n})^{nt}\\25000=P(1+\frac{0.08}{1})^{9*1} \\25000=P(1+0.08)^{9} \\25000=P(1.08)^{9} \\25000=P(1+0.08)^{9} \\25000=P(1.9990)\\P=\frac{25000}{1.9990}\\\mathbf{P=12506.25 }$

So, The lum sum that must be deposited today is $12,506.25 to have a future value of $25,000 in 9 years if the funds carn 8%, compounded annually.