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Sports Car: Finding the Present Value, and Buying a Ferrari

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What is the present value given these assumptions:

PV Periods Interest rate FV
6 7% 15,451
7 13 51,557
23 14 886,073
18 9 550,164

Suppose you need $170,000 for a sports car. Assuming a 12% annual rate of return and the purchase occurs in 9 years, how much must you invest now?

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Solution Summary

The PV is computed using Excel functions, attached.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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