You want to have $25,000 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)$524.24
B)$691.18
C)$724.60
D)$745.11
E)$819.02

Question

Quizplus · Accepted Answer

Present value = $25,000 × [1/(1 + .05)⁶] = $18,655.38Present value = $25,000 × [1/(1 + .055)⁶] = $18,131.15Difference = $18,655.38 - $18,131.15 = $524.24

You Want to Have $25,000 Saved 6 Years from Now