What values do I enter for N, PMT, i/y, FV and PV on a finance calculator to solve for the question below.

Suppose you need to have $50,113.00 in an account 22.00 years from today and that the account pays 11.00%. How much do you have to deposit into the account 12.00 years from today?

1 answer

To solve this problem using a finance calculator, you need to determine how much you need to deposit 12 years from today to have $50,113.00 in an account 22 years from today, given that the account pays an interest rate of 11.00%.

Steps to Solve the Problem:

  1. Identify time periods:

    • Total time until the goal is reached = 22 years.
    • Time from now until the deposit is made = 12 years.
    • Therefore, the time from the deposit until the goal is reached = \(22 - 12 = 10\) years.
  2. Values to Input:

    • N (Number of periods): 10 (the time from the deposit until the goal is reached)
    • i/y (Interest rate per period): 11% (the interest rate of the account)
    • FV (Future Value): $50,113.00 (the amount you want in the future)
    • PMT (Payment per period): 0 (since there are no additional payments made)
    • PV (Present Value): This is what we want to solve for (the amount to deposit).

Summary of Values to Enter:

  • N = 10
  • PMT = 0
  • i/y = 11
  • FV = 50,113
  • PV = ? (This is the value we'll calculate)

Calculation:

Using these inputs, you can then proceed to find the Present Value (PV) on your financial calculator.

Steps to Calculate:

  1. Enter N = 10.
  2. Enter PMT = 0.
  3. Enter i/y = 11.
  4. Enter FV = 50,113.
  5. Compute PV.

This will give you the amount you need to deposit into the account 12 years from today.