Question

Mrs. Radner would like to have a $30,000 down payment for a house. How much must she invest today to have this down payment in 50 months? The investment is earning interest at 3.55% compounded quarterly.

a) $27,554.82
b) $28,112.45
c) $28,750.00
d) $29,420.65

Answer 1

Mrs. Radner must invest 28,750.00 today to have a 30,000 down payment in 50 months.

Step-by-step explanation:

To calculate the amount Mrs. Radner must invest today to have a 30,000 down payment in 50 months, we can use the formula for compound interest:

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

where:

• A is the future value of the investment (30,000)
• P is the principal amount to be invested (unknown)
• r is the annual interest rate (3.55%)
• n is the number of compounding periods per year (4 for quarterly)
• t is the number of years (50/12)

By substituting the given values into the formula and solving for P, we find that Mrs. Radner must invest approximately 28,750.00 today to have a 30,000 down payment in 50 months.