Present Value and Future Value Jeffrey Inc estimates that it

Present Value and Future Value

Jeffrey Inc. estimates that it will need $235,000 in 10 years to expand its manufacturing facilities. A bank has agreed to pay Jeffrey 4% interest compounded annually if the company deposits the entire amount now needed to accumulate $235,000 in 10 years.

Use the appropriate present or future value table:

FV of $1, PV of $1, FV of Annuity of $1 and PV of Annuity of $1

Required:

How much money does Jeffrey need to deposit now? Be sure to use all digits shown on the table and round your answer to a whole dollar.
$

Solution

Amount required in 10 years 235000 Present value factot at 4% for 10 years 0.6756 Present value of amount required after 10 years 158766 Amount required to be deposited today is $ 158766