Question

What amount must be invested today at an annual interest rate of 8% if you want to purchase a $550,000 machine four years in the future?

a) What is the number of time periods (N) you should use in solving this problem?

b) What rate of interest (i), per period of time, should be used in solving this problem?

c) Is the present single amount of money (P) known? (Yes or No)

d) What is the desired future amount? (Use 1000 Separator)

e) Which time value factor should be used to solve this problem? Choices are (F/P,i%,N),(P/F,i%,N),(F/A,i%,N),(A/F,i%,N),(P/A,i%,N),(A/P,i%,N)

f) What is the total amount that must be invested today? (Use 1000 Separator)

Answer 1