Using the previous table, enter the correct factor for three periods at 5%: Future value x Factor = Present value $8,000 x = $6,912 You may want to own a home one day. If you are 20 years old and plan on buying a $200,000 house when you turn 30, how much will you have to invest today, assuming your investment yields an 8% annual return? $fill in the blank 8f0fa5fb3029fb7_2
Using the previous table, enter the correct factor for three periods at 5%: Future value x Factor = Present value $8,000 x = $6,912 You may want to own a home one day. If you are 20 years old and plan on buying a $200,000 house when you turn 30, how much will you have to invest today, assuming your investment yields an 8% annual return? $fill in the blank 8f0fa5fb3029fb7_2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Using the previous table, enter the correct factor for three periods at 5%:
| Future value | x | Factor | = | Present value |
| $8,000 | x |
|
= | $6,912 |
You may want to own a home one day. If you are 20 years old and plan on buying a $200,000 house when you turn 30, how much will you have to invest today, assuming your investment yields an 8% annual return? $fill in the blank 8f0fa5fb3029fb7_2
USE SNIPPET TO ANSWER
Transcribed Image Text:The most straightforward method for calculating the present value of a future amount is to use the Present Value Table. By multiplying the future amount by the appropriate figure from the table, one may adequately determine the present value.
Instructions for using present value tables
+ Present Value of a Future Amount
Table1 - Present Value of $1 at Compound Interest
Period
5%
6%
7%
8%
9%
10%
11%
12%
0.952
0.943
0.935
0.926
0.917
0.909
0.901
0.893
2
0.907
0.890
0.873
0.857
0.842
0.826
0.812
0.797
3
0.864
0.840
0.816
0.794
0.772
0.751
0.731
0.712
4
0.823
0.792
0.763
0.735
0.708
0.683
0.659
0.636
0.784
0.747
0.713
0.681
0.650
0.621
0.593
0.567
6
0.746
0.705
0.666
0.630
0.596
0.564
0.535
0.507
7
0.711
0.665
0.623
0.583
0.547
0.513
0.482
0.452
0.677
0.627
0.582
0.540
0.502
0.467
0.434
0.404
9
0.645
0.592
0.544
0.500
0.460
0.424
0.391
0.361
10
0.614
0.558
0.508
0.463
0.422
0.386
0.352
0.322
11
0.585
0.527
0.475
0.429
0.388
0.350
0.317
0.287
12
0.557
0.497
0.444
0.397
0.356
0.319
0.286
0.257
13
0.530
0.469
0.415
0.368
0.326
0.290
0.258
0.229
14
0.505
0.442
0.388
0.340
0.299
0.263
0.232
0.205
15
0.481
0.417
0.362
0.315
0.275
0.239
0.209
0.183
16
0.458
0.394
0.339
0.292
0.252
0.218
0.188
0.163
17
0.436
0.371
0.317
0.270
0.231
0.198
0.170
0.146
18
0.416
0.350
0.296
0.250
0.212
0.180
0.153
0.130
19
0.396
0.331
0.277
0.232
0.194
0.164
0.138
0.116
20
0.377
0.312
0.258
0.215
0.178
0.149
0.124
0.104
Using the previous table, enter the correct factor for three periods at 5%:
Expert Solution
Step 1
Solution
We know
Present value = future value * discounting factor
5% is the discounting rate in the question given
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