Joe wants to have $20,000 three years from now so that he can make a down payment on a condo. If he can get a 5% interest rate, how does he determine how much to invest? Group of answer choices Multiply $20,000 times the present value of $1 with an interest rate of 5% and 3 time periods. Joe would need to invest $20,000 less 3*(5% of 20,000) or $17,000. Divide $20,000 by the present value of $1 with a 5% interest rate and three time periods. Multiply $20,000 times the future value of $1 with an interest rate of 5% and 3 time periods.
Joe wants to have $20,000 three years from now so that he can make a down payment on a condo. If he can get a 5% interest rate, how does he determine how much to invest? Group of answer choices Multiply $20,000 times the present value of $1 with an interest rate of 5% and 3 time periods. Joe would need to invest $20,000 less 3*(5% of 20,000) or $17,000. Divide $20,000 by the present value of $1 with a 5% interest rate and three time periods. Multiply $20,000 times the future value of $1 with an interest rate of 5% and 3 time periods.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Joe wants to have $20,000 three years from now so that he can make a down payment on a condo. If he can get a 5% interest rate, how does he determine how much to invest?
Group of answer choices
Multiply $20,000 times the present value of $1 with an interest rate of 5% and 3 time periods.
Joe would need to invest $20,000 less 3*(5% of 20,000) or $17,000.
Divide $20,000 by the present value of $1 with a 5% interest rate and three time periods.
Multiply $20,000 times the future value of $1 with an interest rate of 5% and 3 time periods.
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