Today, your grandmother gave you a gift of $25,000 to help pay for your college education. She told you that this amount was the result of a one-time investment at 8% interest 13 years ago. How
Much did your grandmother originally invest?

Question

Quizplus · Accepted Answer

The correct answer is A.The formula for calculating the future value of an investment is:FV = PV * (1 + r)^nwhere:FV is the future valuePV is the present valuer is the annual interest raten is the number of yearsIn this case, we know that the future value is $25,000, the annual interest rate is 8%, and the number of years is 13. We can use the formula to solve for the present value:PV = FV / (1 + r)^nPV = $25,000 / (1 + 0.08)^13PV = $9,192.45Therefore, the grandmother originally invested $9,192.45.

Today, Your Grandmother Gave You a Gift of $25,000 to Help