How much would you need to deposit in a savings account that earns 7%, compounded annually, to withdraw $20,000 eight years from now?

Name: How much would you need to deposit in a savings account that earns 7%, compounded annually, to withdraw $20,000 eight years from now?
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Question

Quizplus · Accepted Answer

To find the present value needed to withdraw $20,000 in 8 years at 7% interest compounded annually, use the formula: PV = FV / (1 + r)^n. Here, FV = $20,000, r = 0.07, n = 8. Calculating gives PV = $20,000 / (1.07)^8 ≈ $11,640.

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