Present value: Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)

Question

Quizplus · Accepted Answer

The present value (PV) can be calculated using the formula: PV = FV / (1 + r)^n, where FV is the future value ($21,000), r is the annual interest rate (0.08), and n is the number of years (3). Plugging in the values: PV = 21000 / (1 + 0.08)^3 = 21000 / 1.2597 ≈ $16,670.

Present Value: Jack Robbins Is Saving for a New Car