How much must you deposit in an account today so that you have a balan
QUESTION
How much must you deposit in an account today so that you have a balance of $8,904 at the end of 13 years if interest on the account is 11% p.a., but with quarterly compounding?Please show the work how you got the answer, thanks
Answer: You must deposit $ 2172.35 today to have $8904 at the end of 13 years @ 11% interest, compounded quarterly. You can find this by using the below formula: PV = FV / (1 i) n Where FV = 8904 i = periodic interest rate i.e. 11 / 4 = 2.75 (because interest paid is quarterly and so four time in one year) n = number of periods, i.e. 13 * 4 = 52 (because there
are four quarter in one year) Solving the equation: = 8904 / (1 0.0275) 52 = 2172.35. You can also find the present value by using a financial calculator, input the values as below: FV = 8904 N = 52 I/YR = 2.75 Now compute the value for PV.
ANSWER:
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.