You intend to buy a vacation home in seven years and plan to have saved $50,000 for a down payment.How much money would you have to place today into an investment that earns 8% per year to have enough for your desired down payment?
A)$29,175
B)$29,100
C)$37,065
D)$25,000

Question

Quizplus · Accepted Answer

To find the present value, use the formula PV = FV / (1 + r)^n. Here, FV = $50,000, r = 0.08, and n = 7. PV = $50,000 / (1.08)^7 = $29,175.

You Intend to Buy a Vacation Home in Seven Years