The amount you must deposit now in your savings account paying 5% interest in order to accumulate $10000 for your first tuition payment when you start college in 3 years is
A) $8500.
B) $7830.
C) $8638.
D) $8860.

Question

Quizplus · Accepted Answer

To find the present value (amount to deposit now), use the formula: Present Value = Future Value / (1 + interest rate)^number of years. Here, $10,000 / (1 + 0.05)^3 = $10,000 / 1.157625 = $8638.

The Amount You Must Deposit Now in Your Savings Account