Question

How much money should be invested in an account that earns 8% interest compounded quarterly to yield $10,000 in 4 years? (Round your answer to the nearest cent.)

Answer 1

757,576cents

Explanation:

Given

Amount = $10000

Time = 4years

Rate = 8%

n = 1/4 year (compounded quarterly

Using the formula to get the principal

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

10000 = P(1+0.08/0.25)^4(1/4)

10000 = P(1+0.32)

10000= 1.32P

P = 10000/1.32

P = 7575.76

Hence he suppose to invest $7575.76 which is equivalent to 7575.76×100 cents i.e 757,576cents