Answer:
The amount a person has to deposit today for it to be $1000 in 5 years at 5% is $783.52
Explanation:
We need to calculate what amount deposited today and compounded at 5% per year would add up to $1000 1 year from now, for that we will have to discount $1000 by 5% and 5 years using this formula.
PV= FV/(1+Interest rate)^N
FV= 1,000
Interest rate = 5%
N= 5
PV= 1,000/(1.05)^5
PV = 783.52
