You have purchased a new mattress for $2 000,and the store has given you a "12 months,same as cash" deal.This means that you do not actually have to pay for the mattress for another year.One year from now,you will have to give the store the full price of $2 000.If the annual interest rate is 10%,how much money do you need today to ensure that you will have $2 000 1 year from today?

Question

Quizplus · Accepted Answer

To ensure that you have $2 000 one year from today, you need to calculate the present value of the amount, taking into account the interest rate of 10%. Using the formula for present value, which is: 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, we can calculate the present value as follows: PV = 2 000 / (1 + 0.1)1 = $1 818 (rounded to the nearest dollar). Therefore, you need $1 818 today to ensure that you will have $2 000 one year from today.

You Have Purchased a New Mattress for $2 000,and the Store