Omar wants to open an account for his grandchildren that he hopes will have $80,000 in it after 20 years. How much must he deposit now into an account that yields 1.75% interest, compounded monthly, so he can be assured of reaching his goal?
1.75 % annual interest is .0175/12 = .001458333 % monthly (periodic) interest
20 years = 240 periods (months)
FV = 80 000 (future value)
PV = amount to deposit
FV = PV (1+i)^n n= periods (240)
80000 = PV (1.001458333)^240
PV = $ 56,389.42