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Homework answers / question archive / 9 years from now, you plan to buy a house for $300,000
9 years from now, you plan to buy a house for $300,000. The down payment is 10% of the house value ($30,000).
If you can earn 2.50% interest. compounded annually, on your savings, how much do you need to deposit today to have $30,000 in 9 years?
(Round your answer to the nearest hundredth: two decimal places. Also, if your answer is an even number, enter it with two decimal places; e.g., 34.00)
Computation of Deposited Amount Today (Present Value):
Present Value = Future Value/(1+Rate)^Time
= $30,000/(1+2.50%)^9
= $30,000/1.2489
Present Value = $24,021.85
So, You need to deposit $24,021.85 today to have $30,000 in 9 years.
Computation of Compound Interest:
Compound Interest = Future Value - Present Value
= $30,000 - $24,021.85
Compound Interest = $5,978.15
