ind the present value that will grow to $4000 if the annual interest rate is 8.5% compounded quarterly for 9 yr.
1 answer:
Answer:
$1876.31
Step-by-step explanation:
The present value can be found using the compound interest formula.
<h3>Present value</h3>The formula for the future value of an investment of P earning annual interest rate r compounded n times per year for t years is ...
FV = P(1 +r/n)^(nt)
Filling in the known values gives ...
4000 = P(1 +0.085/4)^(4·9) = P(1.02125^36)
Then the amount to be invested is ...
P = 4000/1.02125^36 ≈ 1876.31
The present value is $1876.31.
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Answer:
$3027.80
Explanation:
The compound interest formula is the following.
where
A = final amount
P = principle amount
r = interest rate / 100
n = number of compounds per interval
t = time interval
Now in our case,
A = unknown
P = $1900
r = 10.4/100
n = 12 months / year ( because the interest is compounded monthly)
t = 4.5 yrs
Therefore, the compound interest formula gives
Using a calculator, we evaluate the above to get
which is our answer!