You want to have $25,000 saved 6 years from now to buy a house. how much less do you have to deposit today to reach this goal if you can earn 5.5 percent rather than 5 percent on your savings? today's deposit is the only deposit you will make to this savings account this problem requires solving for

To find the present value the formula is

P=A: (1+r) ^t

P present value

A future value 25000

R interest rate

T time 6

So we need to find the present value once at 5.5% and the present value 5%

At 5.5% the present value is

P=25,000: (1+0.055) ^ (6) = 18,131.15

At 5% the present value is

p=25,000: (1+0.05) ^ (6) = 18,655.38

The difference

18,655.38-18,131.15=524.24