Question

How much money must be deposited now in an

Answer 1

Answer:

$\ 487.48$

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=10\ years\\ A=\ 1,000\\ r=7.25\%=7.25/100=0.0725\\n=4$  

substitute in the formula above

$1,000=P(1+\frac{0.0725}{4})^{4*10}$  

$1,000=P(\frac{4.0725}{4})^{40}$

$P=1,000/(\frac{4.0725}{4})^{40}$

$P=\ 487.48$