Autorola plans to invest money today at an interest rate of 6% compoun

Autorola plans to invest money today at an interest rate of 6% compounded annually to have $40,000 available for the purchase of a car four years from now. How much does the firm need to invest today?

A) $50,499.08
B) $36,384.52
C) $31,683.75
D) $9,143.66

ANSWER

C
Explanation: C) Via Calculator: N = 4, I =6, FV = $40,000, Solve for PV = $31,683.75.