You have discovered an investment opportunity that earns a 10% rate of interest compounded annually. What amount should you deposit today to have $10,000 in two years? Use the formula method. (Do not round any intermediary calculations, and round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

To find the present value (PV) needed to achieve a future value (FV) of $10,000 in two years at a 10% annual interest rate, use the formula: PV = FV / (1 + r)^n. Here, FV = $10,000, r = 0.10, and n = 2. So, PV = $10,000 / (1.10)^2 = $8,264.46, rounded to $8,264.

You Have Discovered an Investment Opportunity That Earns a 10