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Q: finance ( Answered 5 out of 5 stars

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Question

Subject: finance
Category: Miscellaneous
Asked by: meanie222-ga
List Price: $2.00

Posted: 24 Feb 2005 20:22 PST
Expires: 26 Mar 2005 20:22 PST
Question ID: 480478

you need $20,000 five years from now for a down payment on your future
home. how much money must you deposit today if your bank pays 8%
interest compounded annually?

Answer

Subject: Re: finance
Answered By: tox-ga on 24 Feb 2005 20:55 PST
Rated: 5 out of 5 stars

Let the amount that you have to make a down payment for be P.

P * (1 + 0.08)^5 = 20,000

P * 1.469328 = 20,000

P = 13,611.66

Thus, you must deposit $13,611.66 in order to get $20,000 five years from now.

meanie222-ga rated this answer: 5 out of 5 stars

and gave an additional tip of: $1.00

great job

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