You know that youll need to purchase a new piece of equipmen

You know that you\'ll need to purchase a new piece of equipment for your recording studio in 4 years, with an anticipated cost of $55,000. You have found a stock that has averaged an 11% rate of return and you want to make a one-time deposit. How much do you need to invest today in order to have the $55,000 at the end of year 4?

Solution

Amount to be invested today = 55,000/1.11^4

Amount to be invested today = 36,230.20