Answer:
She Should Invest $3,815 now.
Explanation:
Future value is the accumulated value of principal and compounded interest earned in specific period on an specific return rate applied to present value. It is calculated by following formula:
FV = PV x ( 1 + r )^n
FV = Future Value = $5000
PV = Present Value = ?
r = return rate = 7%
n = number of years = 4 years
$5000 = PV ( 1 + 7% )^4
$5000 = PV ( 1 + 0.07 )^4
$5000 = PV ( 1.07 )^4
$5000 = PV x 1.311
PV = $5,000 / 1.311
PV = $3,815
