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What is the present value of $8,400 in 5 years if the interest rate is 10% compounded quarterly?

User Nrzonline
by
8.0k points

1 Answer

1 vote

Answer:

The present value is
\$13,764.38

Explanation:

we know that

The compound interest formula is equal to


A=P(1+(r)/(n))^(nt)

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have


t=5\ years\\ P=\$8,400\\ r=0.10\\n=4

substitute in the formula above


A=\$8,400(1+(0.10)/(4))^(4*5)=\$13,764.38

User Gennadii Saprykin
by
7.5k points

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