Franklin needs to have $1,000 in 8 years.If his investment earns 5% compounded annually, how much must he invest today to achieve his goal? (Round your answer to two decimals.)
A)$676.84
B)$680.58
C)$1,477.46
D)$1,469.33

Question

Quizplus · Accepted Answer

To find out how much Franklin needs to invest today to have $1,000 in 8 years at an annual interest rate of 5%, we use the formula for the present value of a single sum: PV = FV / (1 + r)^n, where PV is the present value (amount to invest today), FV is the future value ($1,000), r is the annual interest rate (5% or 0.05), and n is the number of years (8). Plugging in the values, we get PV = $1,000 / (1 + 0.05)^8 = $1,000 / (1.05)^8 ≈ $676.84.

Franklin Needs to Have $1,000 in 8 Years