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5 April, 20:46

An investor wishes to have $1,000 available in five years. How much should be invested today, if the current interest rate is 5 percent (round to the nearest dollar)

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  1. 6 April, 00:39
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    The necessary investement today is $783.53

    Explanation:

    Giving the following information:

    An investor wishes to have $1,000 available in five years. The interest rate is 5%.

    We need to use the following formula:

    PV = FV / (1+i) ^n

    FV = 1000

    i=0.05

    n=5

    PV = 1,000 / (1.05) ^5 = $783.53
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