Present Value: Juan and Carla Herman Plan to Buy a Time-Share

Multiple Choice

Present Value: Juan and Carla Herman plan to buy a time-share in six years in the amount of $16,860. In order to have adequate funds to do so, the Herman's want to make a deposit to their money market fund today. Assume that they will be able to earn an investment rate of 5.75%, compounded annually. How much will Juan and Carla need to deposit today to achieve their goal? (Round off to the nearest dollar.)

A) $19,138
B) $ 8,885
C) $12,055
D) $14,243