You want to have $25,000 for a down payment on a house 6 years from now. if you can earn 6.5 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal?
Use compound interest formula: Future value, F 25000=P(1+i)^n where P=present value to be found i=annual interest rate = 0.065 n=number of years = 6 so 25000=P(1.065)^6 => P=(25000/1.065^6)=$17133.353
