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NISA [10]
3 years ago
12

An individual wishes to deposit an amount of money now and $100 every year so that at the end of 10 years $1,500 will have been

accumulated. With interest at 2% per year, how much should be deposited now
Business
1 answer:
Anna71 [15]3 years ago
6 0

Answer:

$332.26

Explanation:

The amount to be invested today is known as the Principle Value. We discount the future cash flows using the effective interest rate to arrive at the Principle Value.

Using a financial calculator, we can determine the Principle Value (PV) simply as follows :

PV = ??

PMT = - $100

P/YR = 1

I = 2 %

FV = $1,500

N = 10

This gives a PV of ($332.26)

therefore,

$332.26 should be deposited now to meet the goals.

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