Suppose you want a future value of $5,000 on your investment in 10 years. The average annual rate of return is 3%. What should be the present value of your investment?

Question

Quizplus · Accepted Answer

To find the present value of an investment that will grow to $5,000 in 10 years at an annual rate of 3%, you use the present value formula: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the annual interest rate, and n is the number of years. Plugging in the values: PV = $5,000 / (1 + 0.03)^10 ≈ $3,720.

Suppose You Want a Future Value of $5,000 on Your