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7 votes
7 votes
ind the present value that will grow to ​$4000 if the annual interest rate is ​8.5% compounded quarterly for 9 yr.

User Ytdm
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1 Answer

26 votes
26 votes

Answer:

$1876.31

Explanation:

The present value can be found using the compound interest formula.

Present value

The formula for the future value of an investment of P earning annual interest rate r compounded n times per year for t years is ...

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

Filling in the known values gives ...

4000 = P(1 +0.085/4)^(4·9) = P(1.02125^36)

Then the amount to be invested is ...

P = 4000/1.02125^36 ≈ 1876.31

The present value is $1876.31.

ind the present value that will grow to ​$4000 if the annual interest rate is ​8.5% compounded-example-1
User Darryl Young
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