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A man nearing retirement wants to invest some money in a fund that compounds annually at a rate of 6 percent, so that in five years, he will have at least $100,000. How much money must he invest now to make that happen? (Give your answer to the nearest dollar.)

 Apr 8, 2018
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You would use this financial formula to calculate that:

PV = FV / [1 + R]^N, Where R=Interest rate per period, N=number of periods, PV=Present value, FV=Future value.

 

PV = $100,000 / [1 + 0.06]^5

PV = $100,000 / [1.06]^5

PV = $100,000 /     1.3382255776

PV = $74,726 - This is how much he must deposit today to have $100,000 in 5 years @ 6% APR.

 Apr 8, 2018

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