## Time Value of Money Solution Grid

Self-Paced Overview

### Using the Solution Grid

#### Problem:

How much would you have to deposit today in order to have $500,000 in 20 years? Assume you can earn annual interest of 3.5%.

#### Steps

**Read the problem thoroughly.****Make sure you know what you're being asked to do.**In this problem you're being asked to determine how much you would need to deposit today to meet a specific amount in the future.**Prepare a solution grid.**In this problem you are told nothing about intra-year compounding, so assume annual compounding. Therefore, set 1 P/YR.P/YR 1 N I/YR PV PMT FV 20 3.5 ? 0 500,000 **Clear the calculator.****Enter all information in your calculator in the order laid out in the grid.**The answer is: $251,282.94

The calculator keystrokes will be:

The answer is displayed on your calculator as a negative value, which indicates that you would have a cash outflow in the present to receive a cash inflow in the future. Remember that cash outflows should always be a negative value.