If Jim wants $25,000 in five years and can earn an 8% interest rate, how much does he need to invest today? (Note—Solve as a present value problem.)
A) $16,108
B) $17,025
C) $15,158
D) $17,829
Answer: B
Explanation: B) Note—This problem can be solved using either the Future or the Present Value tables.
Solved as Future Value - $25,000/1.469 = $17,018.38 (rounded)
Solved as Present Value - $25,000 × 0.681 = $17,025.00
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