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Veseljchak [2.6K]
3 years ago
5

A newborn child receives a ​$7 comma 000 gift toward a college education from her grandparents. How much will the ​$7 comma 000

be worth in 17 years if it is invested at 6.2​% compounded​ quarterly?
Business
1 answer:
Scrat [10]3 years ago
6 0

Answer:

$7,000 gift will be worth $19,922 after 17 years ( or 68 quarters) given the discount rate is 6.2% compounded quarterly.

Explanation:

The worth of $7,000 nowadays after 17 years is equal to its future value compounded for the time of 17 years or 68 quarters.

As the discounted rate is 6.2% compounded quarterly, we have:

Compounding period = 17 x 4 = 68; Interest rate = 6.2%/4 = 1.55%.

Apply the formula for future value to determine the value of $7,000 in 17 years as: 7,000 x (1+1.55%) ^68 = $19,922.

Thus, the answer is $19,922.

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