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    Compound interest

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    Given below are the present value factors for $1.00 discounted at 8% for 1 to 5 periods. Each of the following items is based on 8% interest compounded annually from day of deposit to day of withdrawal.
    PERIODS PRESENT VALUE OF $1 DISCOUNTED AT 8% PER
    PERIOD
    1 0.926
    2 0.857
    3 0.794
    4 0.735
    5 0.681

    What amount should be deposited in a bank today to grow to $1000 3 years from today?
    (a) $1000/0.794
    (b) $1000 X 0.926 X 3
    (c) ($1000 X 0.926) + ($1000 X 0.857) +
    ($1000 X 0.794)
    (d) $1000 X 0.794

    © BrainMass Inc. brainmass.com March 4, 2021, 5:59 pm ad1c9bdddf
    https://brainmass.com/business/finance/finance-compound-interest-22571

    Solution Summary

    This shows how to determine the amount deposited to get a specified future value.

    $2.49

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