Use this information to answer the following question. What amount must be deposited today at a 12% interest rate to grow to $900 in three years?
A) $662.00
B) $734.40
C) $342.98
D) $841.50

Question

Use this information to answer the following question.  What amount must be deposited today at a 12% interest rate to grow to $900 in three years?
A) $662.00 
B) $734.40 
C) $342.98 
D) $841.50

Quizplus · Accepted Answer

The formula for future value of a lump sum is FV = PV x (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate, and n is the number of periods. In this case, we want to find the present value, so we can rearrange the formula to solve for PV: PV = FV / (1 + r)^n. Substituting the given values, we get PV = 900 / (1 + 0.12)^3 = $734.40. Therefore, the best choice is B, $734.40.

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