Bob Long wants to make a $320,000 down payment on a home in two years. Assume th

Question

Bob Long wants to make a $320,000 down payment on a home in two years. Assume that any investment will earn 6% per year compounded quarterly. Using the present value table, calculate the amount that Bob should invest today if he wants to obtain $320,000 in 2 years. Present value of 396 1 at the end of a period Period 1% | 1HNI 2% | 3% 1.4% 1 5% | 6% 7% 8% | 9%1-10% 10.9901 0.9852 0.98040.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 2 0.9803 0.97070.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 3 0.9706 0.9563 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 4 0.9610 0.9422 0.9238 0.8885 0.8548 0.8227 0.7921 0.76290.7350 0.7084 0.6830 5 0.9515 0.9283 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 6 0.9420 0.9145 0.8880 0.8375 0.7903 0.7462 0.70500.6663 0.6302 0.5963 0.5645 0.9327 0.9010 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.92350.8877 0.8535 0.7894 0.7307 0.6768 0.62740.5820 0.5403 0.5019 0.4665 296 696

Explanation / Answer

from the column of 6%

320000=A(0.9434+0.8900+0.8396+0.7921+0.7473+0.7050+0.6651+0.6274)

320000=A*6.2099

A=51531 $

Bob should invest 51531 $ at present

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