Answer:
PV= 19,042.84
Explanation:
Giving the following information:
You need to have $32,000 in 14 years. You can earn an annual interest rate of 3 percent for the first 4 years, 3.6 percent for the next 3 years, and 4.3 percent for the final 7 years.
To calculate the initial deposit, we need to use the following formula for each interest rate:
PV= FV/(1+i)^n
Last 7 years:
PV= 32,000/(1.043^7)
PV= $23,831.96
Year 4 - 7:
PV= 23,831.96/1.036^(3)
PV= 21,432.88
Finally, for year 0 to 4:
PV= 21,432.88/ 1.03^(4)
PV= 19,042.84
