Exercise D9-3 Margaret wants to buy a car when she graduates from Central Univer

Question

Exercise D9-3 Margaret wants to buy a car when she graduates from Central University 4 years from now. She believes that she will need $30,000 to buy the car Click here to view the factor table. (a) Calculate how much money Margaret must put into her savings account today to have $30,000 in 4 years, assuming she can earn 8% compounded annually. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,975.) Amount (b) Calculate how much money Margaret must put into her savings account today to have $30,000 in 4 years, assuming she can earn 8% compounded semiannually. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to o decimal place, e.g. 58,975.) Amount s

Explanation / Answer

a) Present value = Future value/future value PVF

                           = 30000/1.36049

Present value = 22050

b) Present value = Future value/Future value PVF

                           = 30000/1.36857

Present value = 21921

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