Question

Find the present value that will grow to $20,000 if interest is 3% compounded quarterly for 11 quarters.

Answer 1

Explanation:

3% quarterly is .03 / 4 interest per period ( 11 of them )

the compounding formula is then:

FV = PV ( 1 + i) ^n FV = future value = 20 000 PV = ?

i = .03/4 n = 11

Putting in the numbers:

$ 20 000 = PV ( 1 + .03/4)^11 <=====solve for PV

PV = $ 18421.90