I need easy finace help?

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I need easy finace help?

I'm doing Homework, and I need the formula. What is the amount a person would need to deposit today with 5% interest rate to have $2000 in 3 years? How do i figure this out?

2007-02-16 13:57:27 · 2 answers · asked by Anonymous in Business & Finance ➔ Investing

2 answers

This is a compounding interest question. Three years of interest =1.05 * 1.05 * 1.05 (or 1.05^3). Divide $2000 by 1.05^3 for your answer.

2007-02-16 15:06:08 · answer #1 · answered by JY 2 · 0⤊ 0⤋

Say x is the money needed now, then,
x (1+0.05)^3=2000
x = 2000/(1+0.05)^3=
=1727.70
There fore he needs $1728 now.

2007-02-17 12:01:01 · answer #2 · answered by Mathew C 5 · 0⤊ 0⤋