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Present Value

Your grandmother wanted to have $50,000 in an account for you by the time you were 18 years old. She was able to earn 5% interest on her savings. How much did she have to deposit when you were born in order to achieve her goal? If you want to retire at 65 and withdraw $800 from savings each month for 20 years, how much must you deposit every pay period beginning when you are 25? This is really important information for you to have as you plan your financial future. And, although it sounds complicated, "there’s a formula for that." In this module you’ll learn about the present value formula and learn to use it to answer questions like those we have asked.