Present Value Calculation for Future Deposit

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On the BAII Plus, press 15 N, 8 divide 12 = I/Y, 0 PMT, 1500 FV, CPT PV. On the HP12C, press 15 n, 8 ENTER 12 divide i, 0 PMT, 1500 FV, PV. Make sure the

BAII Plus has the P/Y value set to 1.

To determine the amount you need to deposit today, we can use the formula for future value of a lump sum with compound interest:

FV = PV * (1 + r/n)^(nt)

Where: FV = Future Value PV = Present Value (the amount you need to deposit today) r = Annual interest rate (8%) n = Number of compounding periods per year (monthly compounding, so n = 12) t = Time period in years (15 months / 12 months per year = 1.25 years)

Plugging in the values into the formula:

$1,500 = PV * (1 + 0.08/12)^(12 * 1.25)

Simplifying the equation:

$1,500 = PV * (1.0066667)^(15)

Now, we need to solve for PV. Divide both sides of the equation by (1.0066667)^(15):

PV = $1,500 / (1.0066667)^(15)

Using a financial calculator or a spreadsheet, we can calculate PV:

PV ≈ $1,249.93

Therefore, the amount you must deposit today is approximately $1,249.93.

The correct answer is B. $1,249.93.