Ask Question
2 December, 22:38

Jack and Tracy would like to have $10,000 for a down payment on a new condo. A savings account at their local credit union will pay 2% per year compounded monthly. How much should they deposit now in this account to have the down payment in 3 years

+4
Answers (1)
  1. 3 December, 02:37
    0
    They should deposit $4,9,02 in the account.

    Explanation:

    Present value is the value of future cash flow in present term. The amount received in future have more value today than in future because of opportunity of reinvestment of cash flow.

    Number of periods = 3 x 12 = 36 months

    Present value = Future value / (1 + r) ^n

    Present value = $10,000 / (1 + 0.02) ^36

    Present value = $10,000 / 2.04

    Present value = $4,902.23 = $4,902
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Jack and Tracy would like to have $10,000 for a down payment on a new condo. A savings account at their local credit union will pay 2% per ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers