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Asked Feb 14, 2020
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Question 8

Own tax Teturn? Assume she can earn 3 percent on her savings.
8. Calculating the Time Value of Money for Savings Goals. If you desire to have $20,000 for a down payment for a house in
five years, what amount would you need to deposit today? Assume that your money will earn 4 percent.
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Own tax Teturn? Assume she can earn 3 percent on her savings. 8. Calculating the Time Value of Money for Savings Goals. If you desire to have $20,000 for a down payment for a house in five years, what amount would you need to deposit today? Assume that your money will earn 4 percent. LO1-4

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Expert Answer

Step 1

Future value of an investment today is $20,000 after a time period of 5 years and an interest rate of 4%.

Using the Present Value formula:

Finance homework question answer, step 1, image 1

Answer: An investment of $16,438.54 should be made today.

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