Theresa wants to save $10,000 so that she can surprise her husband with a vacation six years from now. She can earn 7% on her savings. How much more will she have to deposit if she waits one
More year before investing versus if she deposits one lump sum today?
A) $466.44
B) $469.15
C) $470.23
D) $471.08
E) $471.54

Question

Quizplus · Accepted Answer

If she deposits today, she needs to calculate the present value of $10,000 in six years at 7%. If she waits a year, she calculates the present value for five years. The difference between these two present values is $466.44.

Theresa Wants to Save $10,000 So That She Can Surprise