Answer:
The deposit today is:
C. 22142.99
Explanation:
a) Data and Calculations:
Future expected value = $32,250
Time period = 9 months
Annual interest rate = 4% for the first 5 years
Annual interest rate = 4.6% for the next 4 years
Today's deposit to earn the above future value is calculated from an online financial calculator as follows:
N (# of periods) 5
I/Y (Interest per year) 4
PMT (Periodic Payment) 0
FV (Future Value) 26940.33
Results
PV = $22,142.99
Total Interest $4,797.34
N (# of periods) 4
I/Y (Interest per year) 4.6
PMT (Periodic Payment) 0
FV (Future Value) 32250
PV = $26,940.33
Total Interest $5,309.67
