You want to have $30,000 saved 5 years from now to buy a house. How much less do you have to deposit today to reach this goal if you can earn 3.5 percent rather than 2.5 percent on your savings? Today's deposit is the only deposit you will make to this savings account.
A) $1,256.43
B) $891.18
C) $1,124.60
D) $945.11
E) $1,219.02

Question

Quizplus · Accepted Answer

The present value of $30,000 at 3.5% interest over 5 years is less than at 2.5%, resulting in a difference of $1,256.43.

You Want to Have $30,000 Saved 5 Years from Now