How much must she invest today to accomplish this purpose if the interest rate is

QUESTION

Mme. Barefield wishes to have $150,000 at the end of 8 years. How much must she invest today to accomplish this purpose if the interest rate is
a. 6% per year?
b. 8% per year?
Solution: Future Value of amount invested =$150,000 Time Period=8 years Interest Rate=6% Investment required today(Present Value of Investment)= Future Value /((1+Interest Rate)^Time Period) =$150,000/(1+6%)^8)= =$150,000/1.593848=$94111.86 Part 2: Solution: Future Value of amount invested

150,000 Time Period=8 years Interest Rate=8% Investment required today(Present Value of Investment)= Future Value /((1+Interest Rate)^Time Period) =$150,000/(1+8%)^8)= =$150,000/1.85093=$81040.33

ANSWER:

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