Question

Use the present value formula to determine the amount to be invested​ now, or the present value needed. the desired accumulated amount is ​$140,000 after 7 years invested in an account with 6​% interest compounded quarterly. the amount to be invested​ now, or the present value​ needed, is ​$ enter your response here. ​(round to the nearest cent as​ needed.)

Answer 1

To calculate the present value needed, we use the present value formula. After plugging in the given values, the amount to be invested now is approximately $89,526.48.

Step-by-step explanation:

To determine the present value needed to accumulate a desired amount of $140,000 after 7 years with a 6% interest rate compounded quarterly, we can use the present value formula. The formula is:

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

Where PV is the present value, FV is the future value, r is the interest rate, n is the number of times compounded per year, and t is the number of years. Plugging in the given values, we have:

PV = $140,000 / (1 + 0.06/4)^(4*7)

Simplifying the expression:

PV ≈ $89,526.48

Therefore, the amount to be invested now, or the present value needed, is approximately $89,526.48.