Answer:
$29,185.98
Explanation:
Compounding and discounting are the methods used to determine the relationship between present and future value.
Compounding is the method used to determine the future worth of an amount today while discounting is the method used to determine the present value of a future amount.
Both are related by
Fv = Pv(1 + r)^n
where Fv = future amount
Pv = present value
r = rate
n = time
Therefore,
35000 = Pv(1 +0.037)^5
Pv = 35000(1 +0.037)^-5
Pv = $29,185.98
You would have to deposit $29,185.98 to be able to make the down payment of $35,000 on a house in 2 years
