A company needs to have $150,000 in 5 years,and will create a fund to insure that the $150,000 will be available.If it can earn a 6% return compounded annually,how much must the company invest in the fund today to equal the $150,000 at the end of 5 years? (PV of $1,FV of $1,PVA of $1,and FVA of $1)$\bold{\text{(Use appropriate factor(s)from the tables provided.)}}$
A)$141,000
B)$112,095
C)$100,000
D)$45,000
E)$105,000

Question

Quizplus · Accepted Answer

We need to use the future value table since we are given the present value and asked to find the future value. From the table, the factor for 5 years at 6% is 1.3382. Therefore, the amount that needs to be invested today is:

$150,000 ÷ 1.3382 = $112,095 (rounded to the nearest dollar)

Therefore, the best choice is B.

A Company Needs to Have $150,000 in 5 Years,and Will (Use appropriate factor(s)from the tables provided.)\bold{\text{(Use appropriate factor(s)from the tables provided.)}}(Use appropriate factor(s)from the tables provided.)

A Company Needs to Have $150,000 in 5 Years,and Will $\bold{\text{(Use appropriate factor(s)from the tables provided.)}}$