Use this information to answer the following question. What amount must be deposited today to grow to $900 in three years,assuming an APR of 7 percent?
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 to grow to $900 in three years,assuming an APR of 7 percent?
A)$662.00 
B)$734.40 
C)$342.98 
D)$841.50

Quizplus · Accepted Answer

We can use the formula for future value of a lump sum: FV = PV * (1 + r)^n
where FV = $900, r = 0.07 (7% APR), and n = 3 years. We want to find PV (present value).
Solving for PV, we get:
PV = FV / (1 + r)^n
PV = $900 / (1 + 0.07)^3
PV = $734.40
Therefore, the amount that must be deposited today is $734.40, which corresponds to answer choice B.

Use This Information to Answer the Following Question