lydiapoetz3267 lydiapoetz3267
  • 02-10-2019
  • Mathematics
contestada

What initial investment subject to annual compounding at 12 % is needed to produce $1, 000 after two years?

Respuesta :

jlpbossluis
jlpbossluis jlpbossluis
  • 06-10-2019

Answer:

$797.19

Step-by-step explanation:

We use the formula for Future Value of Money

[tex]FV=PV(1+i)^n\\\\[/tex]

FV=1,000

i=12%

n=2

[tex]FV=PV(1+i)^n\\\\1,000=PV(1+0.12)^2\\\\1,000=PV(1.12)^2\\\\\frac{1,000}{(1.12)^2} =PV\\\\797.19=PV[/tex]

So the initial investment has to be 797.19

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