SOLUTION: Word problem: The value of our money drops 6% each year. If I had $10,000 five years ago, what would the value of that money be today? I calculated the answer a couple of di

Question 69598: Word problem: The value of our money drops 6% each year. If I had $10,000 five years ago, what would the value of that money be today?

I calculated the answer a couple of different ways (FV of presnt sum & and just used a calculator) and the answer was the same $7,339.04, but the answer in the book is $6,840.59. Can someone please tell me how to get to this answer? Thank you.
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
The value of our money drops 6% each year. If I had $10,000 five years ago, what would the value of that money be today?
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At end of 1st year: 10000*0.94
At the end of 2nd year: 10000*0.94*0.94
...
At the end of 5 years: 10000*0.94^5 = $7339.04
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You are right; the book answer is wrong.
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Cheers,
Stan H.
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