Question

142. Yavuz wishes to make a single deposit P at time t 5 0 into a fund paying 15 percent compounded quarterly such that $1,000 payments are received at t 5 1, 2, 3, and 4 (periods are 3-month intervals), and a single payment of $7,500 is received at t 5 12. What single deposit is required

Answer 1

$8,473.13

Step-by-step explanation:

The computation of the single deposit is shown below:

Rate of interest = 15% ÷ 4 quarters = 3.75%

Annual payments = $1,000 per year

So, now in this question we have to find out the present value that is shown below:

= $1,000 ÷ (1 + 3.75%)^1 + $1,000 ÷ (1 + 3.75%)^2 + $1,000 ÷ (1 + 3.75%)^3 + $1,000 ÷ (1 + 3.75%)^3 + $7,500 ÷ (1 + 3.75%)^12

= $963.86 + $929.02 + $895.44 + $863.07 + $4,821.74

= $8,473.13