You need to have 31000 in 5 years You can earn an annual int

You need to have $31,000 in 5 years. You can earn an annual interest rate of 3 percent for the first 3 years, and 3.6 percent for the next 2 years. How much do you have to deposit today?

rev: 01_30_2018_QC_CS-115320, 02_01_2018_QC_CS-115650

$25,421.63

$26,432.03

$26,278.95

$26,740.87

$25,975.44

Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

31000=P(1.03)^3*(1.036)^2

31000=P*1.172819518

P=31000/1.172819518

which is equal to

=$26432.03(Approx).