To compute future value (fv) of a single sum, use Table A1 in the appendix and t

Question

To compute future value (fv) of a single sum, use Table A1 in the appendix and the formula: fv = pv * factor.

To find the present value (pv) of a known future amount, use Table A2 in the appendix and the formula pv = fv * factor.

You want to have $6000 eight years from today to purchase a G. Loomis fishing rod and a Van Staal fishing reel. You expect to earn 9%, on average. How much should you invest today to reach your target in 8 years ? Solve, using Table A2.

Be sure to show the formula and your "plug-in's, then solve. Show all the steps in your work.

Explanation / Answer

PV= cashflow/(1+r)^n

PV= 6000/1.09^8= $3011.1976 or $3011.20

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