Which of the following choices is closest to the amount of money that must be invested today in order to have $25,000 at the end of four years if the rate of return is 12% compounded annually? Use appendix Table 1, Table 2, Table 3 and Table 4.

Question

Quizplus · Accepted Answer

The future value of $1 invested today at 12% compounded annually for four years is $1.5735. Therefore, to have $25,000 at the end of four years, you would need to invest $25,000/$1.5735 = $15,900 today.

Which of the Following Choices Is Closest to the Amount