You want to make an investment that will yield a lump sum of $ 94,393 in 5 years

Finance May 21, 2021

You want to make an investment that will yield a lump sum of $ 94,393 in 5 years. You will invest at a nominal rate of 9 %. How much do you need to invest today to reach the above future value? Enter your answer to the nearest $.01. Do not use $ or , signs in your answer. Enter your answer as a positive number.

Expert Solution

Computation of Present Value:

Present Value = Future Value/(1+Interest Rate)^Time

= $94,393 / (1+9%)^5

= $94,393 / 1.538624

Present Value = $61,348.97

So, You need to invest $61,348.97 today to reach the future value.

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