2.8 Present Value of Investments - B

Multiple Choice

Bellwork:

Bob wants $50,000 at the end of 7 years in order to buy a car. If his bank pays 1.2% interest, compounded annually, how much must he deposit now in order to reach his goal?

• P=$45,994.56

• P=$45,995

• P=$45,994.55

• P=$45,990

Financial Algebra Second Edition

Slide 2

2-8 Present Value of Investments

Learning Goals

The students will be able to:

• Calculate the present value of a single deposit investment.

• Calculate the present value of a periodic deposit investment.

Financial Algebra

Slide 3

Example 3 :
Nick wants to install central air conditioning in his home in 3 years. He estimates the total cost to be $15,000. How much must he deposit monthly into an account that pays 1.4% interest, compounded monthly, in order to have enough money?
Round up to the nearest dollars.

Financial Algebra Second Edition

Slide 4

Nick must deposit about $409 every month.

Multiple Choice

Mary wants to go on a $10,000 vacation in 6 months. She has a bank account that pays 2.25% interest, compounded monthly. How much must she deposit each month to afford the vacation?

• P=$1,658.90

• P=$1,659.00

• P=$1,658.87

• P=$1,658.00

Multiple Choice

Bob wants $50,000 at the end of 7 years in order to buy a car. If his bank pays 1.2% interest, compounded annually, how much must he deposit each year in order to reach his goal?

• P=$6,889.80

• P=$6,800.89

• P=$6,889.89

• P=$6,089.80

Financial Algebra

Slide 3

Classwork :
To turn in today

Textbook site:
Left side panel,
Applications 2-8a & 2-8b


HW: Study for quiz on Friday (tomorrow)