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

Question: 1 / 505

In order to maintain today's college costs with an 8% inflation rate, what is the value of $20,000 in 8 years?

$30,000

To determine the future value of $20,000 in 8 years given an inflation rate of 8%, you would use the future value formula which accounts for inflation, often expressed as:

Future Value = Present Value × (1 + inflation rate)^number of years

In this case:

- Present Value (PV) = $20,000

- Inflation rate (r) = 8% or 0.08

- Number of years (t) = 8

Plugging these values into the formula, you get:

Future Value = $20,000 × (1 + 0.08)^8

Future Value = $20,000 × (1.08)^8

Calculating (1.08)^8 gives approximately 1.8509. Now, multiplying this by the present value:

Future Value ≈ $20,000 × 1.8509 ≈ $37,018

Among the given choices, $30,000, $28,000, $35,000, and $40,000, the future value of approximately $37,018 is closest to $40,000, making that the most realistic answer when matching it to the options provided.

Therefore, the answer more

Get further explanation with Examzify DeepDiveBeta

$28,000

$35,000

$40,000

Next Question

Report this question

Download Certified Financial Planner (CFP) Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy