Compute the amount of money to be set aside today to ensure

Compute the amount of money to be set aside today to ensure a future value of dollar3,900 in one year if the interest rate is 9.5 Percentage annually, compounded annually.

Solution

future value =3900

time = 1year

r = 9.5% compounded annually

Hence FV = P(1+0.095)¹

P = 3561.44 is to be set aside