You want to have $35,000 saved 6 years from now to buy a house. How much less do you have to deposit today to reach this goal if you can earn 5.5 percent rather than 5 percent on your savings? Today's deposit is the only deposit you will make to this savings account.
A)$733.94
B)$791.18
C)$824.60
D)$845.11
E)$919.02

Question

Quizplus · Accepted Answer

Present value = $35,000 F1F1F1S1F1F1F10 [1/(1 + .05)⁶] = $26,117.54Present value = $35,000 F1F1F1S1F1F1F10 [1/(1 + .055)⁶] = $25,383.60Difference = $26,117.54 - $25,383.60 = $733.94

You Want to Have $35,000 Saved 6 Years from Now