TVM: How much would you have to deposit now

How much would you have to deposit now into an account that earns 3% per month to fund a $100 withdrawal in month 24?

**Solution:**

The given situation follows the singleton equation patterns - the money increases by 3% per month and nothing else. So, since you are trying to find the present worth of $100 in the future, you would need to use the singleton equation: P = F / (1+i)^{N}

Note: This equation is also written as P = (F)*(1+i)^{-N}

P = F / (1+i)^{N}

P = ($100)/(1+.03)^{(24)}

**P = $49.19**

So, you would have to deposit $49.19 now to fund a future $100 withdrawal.

page revision: 4, last edited: 25 Oct 2015 23:12