Certified Financial Planner (CFP) Exam 2026 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 505

If Kasey wants to give her daughter $25,000 in 8 years, how much should she invest today at an 8% annual interest rate compounded annually?

$12,802.95

$13,506.72

To determine how much Kasey should invest today to reach her goal of $25,000 in 8 years, we can use the present value formula for compound interest. The present value (PV) can be calculated using the formula:

\[

PV = \frac{FV}{(1 + r)^n}

\]

Where:

- \(FV\) is the future value (the amount she wants to have in the future, which is $25,000),

- \(r\) is the annual interest rate (8%, or 0.08), and

- \(n\) is the number of years until the investment matures (8 years).

Plugging in the numbers:

\[

PV = \frac{25000}{(1 + 0.08)^8}

\]

First, calculate \((1 + 0.08)^8\):

\[

(1.08)^8 \approx 1.85093

\]

Now substitute this back into the formula:

\[

PV = \frac{25000}{1.85093} \approx 13506.72

\]

Thus, Kasey needs to invest approximately $13,506.72 today to accumulate $

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$13,347.70

$13,210.34

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