Question

Present and future value tables of $1 at 9% are presented below.

PV of $1

FV of $1

PVA of $1

FVAD of $1

FVA of $1

1

0.91743

1.09000

0.91743

1.0900

1.0000

2

0.84168

1.18810

1.75911

2.2781

2.0900

3

0.77218

1.29503

2.53129

3.5731

3.2781

4

0.70843

1.41158

3.23972

4.9847

4.5731

5

0.64993

1.53862

3.88965

6.5233

5.9847

6

0.59627

1.67710

4.48592

8.2004

7.5233

How much must be invested now at 9% interest to accumulate to $21,000 in four years?

Answer 1

Present value of a sum of money to be received at a future date is determined by discounting the future value at the interest rate that the money could earn over the period.

Present value = future valul X (PV FA, i) = $24000 x CPUE4, ay) - $21,000 X 0.70843 = $14,877.03 .: $ 146,877.03 must invested now at 9% interest, to accumulate to $21,000 in 4 years.