163k views
3 votes
Barbara knows that she will need to buy a new car in 3 years . The car will cost $15000 by then. How much should she invest now at 8%, compound quarterly,so that she will have enough to buy a new car?

1 Answer

1 vote

Answer:

Around $11827.40

Explanation:

The formula for compounded interest is
A=P(1+(r)/(n))^(nt), where A is the desired amount, P is the amount you invest, r is the decimal rate, n is the number of times per year you compound the interest, and t is the number of years. You know A to be 15000, r to be 8% or 0.08, n to be quarterly or 4, and t to be 3. To find P, you can set up the following equation:


15000=P(1+(0.08)/(4))^(4\cdot 3)


15000=P(1.02)^(12)


15000=1.2682P


P\approx 11827.40 dollars

Hope this helps!

User Harry Stuart
by
8.0k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories