Question

tanja wants to establish an account that will supplement her retirement income beginning 10 years from now. find the lump sum she must deposit today so that $200,000 will be available at time of retirement, if the interest rate is 6%, compounded quarterly. (round to the nearest cent as needed)

Answer 1

For this case we can use the following formula:

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

And for this case

n= 4 compounded quarterly

t= 10 years

A= 200000

P=?

r=0.06

And we can solve for P and we got:

`P=(200000)/((1+(0.06)/(4))^(4\cdot10))=110252.5`

So then the final answer would be:

110252.5