Question

How much should you deposit today in a deposit that pays monthly compounded interest, if the final value of the deposit will be 70 000 $, in 12 years time, and the APR is 2%?

a. 35 783 $

b. 54 812 $

c. 49 472 $

d. 67 529 $

e. 32 567 $

Answer 1

$PV=P_0(1+r)^{n}$

$70000= P_0( 1+0.02)^{12}$

$P_0= \frac{70000}{(1+0.2)^{12}}$

$= \frac{70000}{1.26824}= 55, 194$