The parents of a newborn want to start a savings account for their daughter. They would like to have $20,000 in the account 18 years from now. How much money do they need to invest now in an account that pays 3.5% interest compounded daily, so that they reach their goal?* $16,052.16 $10,652.16 $9,652.16
The parents of a newborn want to start a savings account for their daughter. They would like to have $20,000 in the account 18 years from now. How much money do they need to invest now in an account that pays 3.5% interest compounded daily, so that they reach their goal?* $16,052.16 $10,652.16 $9,652.16
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The parents of a newborn want to start a savings account for their daughter. They would like to have $20,000 in the account 18 years from now. How much money do they need to invest now in an account that pays 3.5% interest compounded daily, so that they reach their goal?*
$16,052.16
$10,652.16
$9,652.16
Expert Solution
Step 1
Time value tells that the money received today has more value than that of receiving the exact value later on in the future.
Step 2
The formulation sheet is:
To-open-the--PV-function--window---MS-excel--->-formulas--->-financials--->-PV.
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