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4. Suppose your retirement goal is to accumulate $400 in 2.5 years. How much do you need to deposit in the bank today to meet your goal if the bank offers an interest rate 5.65%

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Answer:

PV= $348.65

Explanation:

Giving the following information:

Future Value= $400

Interest rate= 5.65% = 0.0565

Number of periods= 2.5 years

To calculate the initial investment, we need to use the following present value formula:

PV= FV/(1+i)^n

PV= 400 / (1.0565^2.5)

PV= $348.65

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