Question

A company will need ​$30,000 in 8 years for a new addition. To meet this​ goal, the company deposits money in an account today that pays 4​% annual interest compounded quarterly. Find the amount that should be invested to total ​$30,000 in 8 years.

Answer 1

Explanation:

Use this formula:

`A(t)=P(1+(r)/(n))^((n)(t))`

where A(t) is the amount after the investment time is over, P is the initial amount invested (what we are looking for), r is the interest rate in decimal form, n is the number of times it compounds per year, and t is the time in years. Fillling in:

`30,000=P(1+(.04)/(4))^((4)(8))` and simplifying a bit:

`30,000=P(1+.01)^(32)` and some more:

30,000 = P(1.374940697)

P = $21,819.12