Question

If you need $1 million in 40 years, how much will you have to deposit today at 6% compounded annually?

A.)$10,957,453.67

B.)$97,222.19

C.)$10,258,717.94

D.)$91,262.07

Answer 1

Compute the present value of future requirement, using the equation as shown below:

Present value = Future value/ {(1 + Rate)^Time}

                      = $1,000,000/ {(1 + 0.06)^40}

                      = $1,000,000/ 10.2857179365

                      = $97,222.1877144

Hence, the present value of future requirement is $97,222.1877144.