You need to have $35,000 for a down payment on a house in 7 years. If you can earn an annual interest rate of 3.4 percent, how much will you have to deposit today?

Multiple Choice

$27,696.46

$26,785.75

$26,241.82

$22,662.15

$26,776.83

To find out how much you need to deposit today, we'll use the formula for **present value** of a future amount, which is:

\[
PV = \frac{FV}{(1 + r)^t}
\]

Where:
- $ PV $ is the present value (the amount you need to deposit today),
- $ FV $ is the future value (the target amount, $35,000),
- $ r $ is the annual interest rate (expressed as a decimal, so 3.4% = 0.034),
- $ t $ is the time in years (7 years).

Now, let's plug in the values and calculate:

\[
PV = \frac{35,000}{(1 + 0.034)^7}
\]

I'll calculate the present value.The amount you need to deposit today is approximately **$27,696.46**.

This matches the first option in the multiple choice:

- **$27,696.46**

Would you like further details or explanations on this?

Here are 5 related questions:
1. How would the result change if the interest rate were 4% instead of 3.4%?
2. What if you wanted to save $50,000 instead of $35,000?
3. How much would you have after 7 years if you deposited $27,696.46 today at 3.4%?
4. What happens if you need the down payment in 10 years instead of 7 years?
5. How does compound interest differ from simple interest in this scenario?

**Tip:** Always convert interest rates into decimal form (e.g., 3.4% = 0.034) before performing calculations!

You need to have $35,000 for a down payment on a house in 7 years. If you can earn an annual interest rate of 3.4 percent, how much will you have to deposit today?

Learn how to calculate the present value of a $35,000 down payment you need in 7 years, using a 3.4% annual interest rate. This guide walks you through applying the compound interest formula to determine how much to deposit today, making it ideal for high school students studying finance and exponential functions.

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