Exercise

Calculating present value

Compound interest can have a very powerful effect over time. In this exercise, you will examine how much you need to invest upfront at different interest rates to achieve a financial target. numpy_financial has already been imported for you as npf.

Imagine you want to have saved USD 11,000 after 7 years and consider three different investments, each paying 3%, 4%, and 5% annual interest compounded monthly. If you contribute USD 100 per month, what initial lump sum should you also invest to achieve this goal?

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Calculate the upfront PV you need to invest at 3% annual interest compounded monthly, with monthly top-ups of USD 100 to reach USD 11,000 in 7 years, and print the result.