We can use this formula to determine how much money the investor must invest so that his investment will increase from $25,000 in seven years.
Future Value = Present Value (1 + Interest Rate) ^ Time
25.000 = Value Present (1 + 0.065) 7.
Present Value = $ 17,184.05
This calculation will help Tommie determine the amount of capital that he needs to invest upfront to reach his goal within a given timeframe. When evaluating investment opportunities, one can make informed decisions by knowing the initial amount that must be invested and what risks are involved.
Moreover, it also helps provide clarity around any potential returns expected for example if Harris invests based on the above calculations then he’s going to expect approximately 6.5 percent return annually for his money over a 7 year period.