How much would you have to deposit today in a bank account paying 8 percent annual interest to allow you to withdraw $200 one year from now?

Question

Quizplus · Accepted Answer

We can use the formula: 
FV = PV * (1 + r)^n 
where FV is the future value (in this case, $200), PV is the present value we want to find, r is the annual interest rate (8% or 0.08), and n is the number of periods (1 year). 
Substituting known values, we get: 
$200 = PV * (1 + 0.08)^1 
Simplifying, we get: 
$200 = PV * 1.08 
Dividing both sides by 1.08, we get: 
PV = $185.19 (rounded to the nearest cent)

How Much Would You Have to Deposit Today in a Bank