You plan to give your child a new car for her graduation in 18 months. The...

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You plan to give your child a new car for her graduation in 18 months. The...

You plan to give your child a new car for her graduation in 18 months.
The car costs $23,000
How much must you invest today in an account that earns 2.45% APR (compounded monthly) to exactly pay for the car?

Calculate your answer to the nearest dollar.

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Answer 1

Answer #1

Ans $ 22171

FV =	Future Value
PV =	Present Value
r =	rate of interest
n=	no of period


PV =	FV/ (1 + r )^n
PV =	23000 / ((1 + 2.45%/12)^18)
PV =	22171

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Answer 2

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