Question

Jenna wants $14,000 saved in 5 years to make a down payment on a house. How much money should she invest now at 2.85% compounded quarterly in order to meet her goal?

Jenna wants $14,000 saved in 5 years to make a down payment on a house. How much money should she invest now at 2.85% compounded quarterly in order to meet her goal?

Answer 1

- Future Value in 5 years = $14,000

Calculating the Present Value of amount Invested today:-

Where,

r = Interest rate = 2.85%

n= no of periods = 5 years

m = no of times compounding in a year = 4 (compounded Quarterly)

Invested Amount = $12,146.76

So, Amount to be Invested Today is $12,146.76

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