Respuesta :
Answer:
$8,820.36
Explanation:
Present Value = Future Value /(1+ interest rate) ^ number of years
Future value = $12,000
Number of years = 4
Interest rate = 8%
Therefore the present value = 12,000 / (1 + 0.08) ^ 4 = $8,820.36
Hence, the amount he will need to set aside today to reach his goal is $8,820.36
Answer:
$8,820.36
Explanation:
Compounding is the system used to compute the future value of an amount today. It is the means to determine the tomorrow's worth of $1.
The opposite of this is discounting which is the determination of the present value of a future amount i.e the current value of $1 tomorrow.
It is given as
Fv = Pv ( 1 + r )^n
where
Fv = Future value
Pv = Present value
r = rate
n = time in years
12000 = Pv ( 1 + 0.08)^4
Pv = 12000(1.08^-4)
= $8,820.36
