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You want to have $25,000 saved 6 years from now to buy a house. how much less do you have to deposit today to reach this goal if you can earn 5.5 percent rather than 5 percent on your savings? today's deposit is the only deposit you will make to this savings account this problem requires solving for

Respuesta :

Aliwohaish12
To find the present value the formula is
P=A÷(1+r)^t
P present value
A future value 25000
R interest rate
T time 6

So we need to find the present value once at 5.5% and the present value 5%

At 5.5% the present value is
P=25,000÷(1+0.055)^(6)=18,131.15

At 5% the present value is
p=25,000÷(1+0.05)^(6)=18,655.38

The difference
18,655.38−18,131.15=524.24

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