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:
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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.
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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:
- Enter N = 10.
- Enter PMT = 0.
- Enter i/y = 11.
- Enter FV = 50,113.
- Compute PV.
This will give you the amount you need to deposit into the account 12 years from today.