ronnie cox has just inherited $27,000. how much of this money should he set aside today to have $22,000 to…

ronnie cox has just inherited $27,000. how much of this money should he set aside today to have $22,000 to pay cash for a ventura van, which he plans to purchase in one year? he can invest at 1.4% annually, compounded annually. the amount of money to be set aside is $ (round to the nearest cent as needed.)

ronnie cox has just inherited $27,000. how much of this money should he set aside today to have $22,000 to pay cash for a ventura van, which he plans to purchase in one year? he can invest at 1.4% annually, compounded annually. the amount of money to be set aside is $ (round to the nearest cent as needed.)

Answer

Answer:

$21794.87$

Explanation:

Step1: Recall compound - interest formula

$A = P(1 + r)^n$, where $A$ is the future value, $P$ is the present value, $r$ is the annual interest rate, and $n$ is the number of years. We want to find $P$, so we can rewrite the formula as $P=\frac{A}{(1 + r)^n}$.

Step2: Identify values

$A = 22000$, $r=0.014$, and $n = 1$.

Step3: Calculate present value

$P=\frac{22000}{(1 + 0.014)^1}=\frac{22000}{1.014}\approx21794.87$.