Asked Dec 8, 2019

Mr. and Mrs. Davis needs to have $100,000 to start their own catering business in 15 years.  They expect to earn 7% annually on their investment.  What amount do they need to have today so that they can reach their financial goal of having $100,000 in 15 years?


Expert Answer

Step 1

Future value (FV) of the savings should be $100000.

Number of years ( n ) of savings/investment is 15 years

Rate of interest ( r )earned on the same is 7%

Principal amount to be invested can be calculated as below:

Step 2

Image Transcriptionclose

FV PV =- (1+r)" $100000 (1+0.07)5 $10000 2.75903154071533 = $36244.601964236


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