Respuesta :
Answer:
The amounted must be deposited today = $12628.19
Explanation:
The amount deposited by sister (present value) = $12000
Annual rate of return earned (r) = 10.1 %
Time ( n ) = 8 years
[tex]\text{Total increased amount of sister after 8 years or future value} = PV(1 + r)^n \\[/tex]
[tex]12000(1 + 10.1 Per cent)^8 \\[/tex]
[tex]= 25910.74 dollar[/tex]
Now, in order to earn the same amount after 8 years with the interest rate of 9.4 percent. Therefore, the amount which is deposited at present will be:
[tex]Present \ value = \frac{Future \ value}{(1 + r)^n} \\[/tex]
[tex]Present \ value = \frac{25910.74}{(1 + 9.4 percent )^{8}} \\[/tex]
[tex]= 12628.19 Dollar[/tex]
Therefore, $12628.19, is the amount that must be deposited by me.
