How much must be deposited today in an account earning 6% annually to accumulate a 20% down payment to use in purchasing a car one year from now, assuming that the car's current price is $20,000, and inflation will be 4%?
A) $3,774.61
B) $3,782.20
C) $3,924.53
D)$4,080.08

Question

Quizplus · Accepted Answer

Down payment needed = ($20,000 × 1.04) × .2 = $4,160PV = FV/(1 + r)^tPV = $4,160/(1.06)PV = $3,924.53

How Much Must Be Deposited Today in an Account Earning