Answered

To have $25,000 to spend on a new car in five years, how much money should Jill invest today at 8% compounded monthly?


A.


$5,000


B.


$16,463


C.


$16,780


D.


$20,000

Answer :

Answer:

 The answer is C. $16,780

Step-by-step explanation:

[tex]PV = 25,000(1+\frac{0.08}{12} )x^{-12(5)} = 16,780[/tex]

The amount of money that Jill should invest today given the monthly compounding is $16,780.

What should be invested today?

The formula that should be used to determine the amount that should be invested today is:

Present value = future value / (1 + r)^nm

Where:

  • r = interest rate = 8/12 = 0.67%
  • n = number of years
  • m = number of compounding = 12

25,000 / (1.0067^(12 x 5)) = $16,780

To learn more about present value, please check: https://brainly.com/question/24108530

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