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notsponge [240]
3 years ago
13

You need to have $32,250 in 9 years. You can earn an annual interest rate of 4 percent for the first 5 years, and 4.6 percent fo

r the next 4 years. How much do you have to deposit today? A. 23341.12 B. 20769.78 C. 22142.99 D. 24936.86
Business
1 answer:
baherus [9]3 years ago
5 0

Answer:

The deposit today is:

C. 22142.99

Explanation:

a) Data and Calculations:

Future expected value = $32,250

Time period = 9 months

Annual interest rate = 4% for the first 5 years

Annual interest rate = 4.6% for the next 4 years

Today's deposit to earn the above future value is calculated from an online financial calculator as follows:

N (# of periods)  5

I/Y (Interest per year)  4

PMT (Periodic Payment)  0

FV (Future Value)  26940.33

Results

PV = $22,142.99

Total Interest $4,797.34

N (# of periods)  4

I/Y (Interest per year)  4.6

PMT (Periodic Payment)  0

FV (Future Value)  32250

PV = $26,940.33

Total Interest $5,309.67

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