Question

Oliver invested some money 5 years ago at 12% p.M.Interest compounded quarterly and now received a payment of N$ 50000.How much was his initial investment

Answer 1

$47,092.45

Explanation:

Oliver invested=?

Rate= 12%=0.012

n=5 years

m=4 "compounded quarterly"

Payment received = $50000

Present Value = P(1+i/m)^-mn

PV=50000(1+0.012/4)^-5*4

PV=50000(1+0.003)^-5*4

PV=50000(1.003)^-5*4

PV=50000(1.003)^-20

PV=50000(0.9418491)

PV=47,092.455

PV=$47,092.45

The amount that Oliver initially invested 5 years ago at 12% p.m.Interest compounded quarterly and now received a payment of $50000 is $47,092.45.