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How much money do you have to put into a bank account that pays 10% interest compounded annually to have $10,000 in ten years?

Respuesta :

ahmedgodtrust

Answer:

Future value (FV) = $10,000

Interest rate (r) = 10% = 0.10

Number of years (n) = 10 years

PV = FV(1 + r)-n

PV = $10,000(1 + 0.10)-10

PV = $10,000(1.10)-10

PV = $10,000 x 0.3855

PV =  $3,855              

Explanation:

In this case, there is need to calculate the present value.  The present value is obtained by discounting  the future value at 10% interest rate per annum for 8 years.          

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