Question

A company will need ​$30,000 in 8 years for a new addition. To meet this​ goal, the company deposits money in an account today that pays 4​% annual interest compounded quarterly. Find the amount that should be invested to total ​$30,000 in 8 years.

Answer 1

Answer:

Step-by-step explanation:

Use this formula:

$A(t)=P(1+\frac{r}{n})^{(n)(t)}$

where A(t) is the amount after the investment time is over, P is the initial amount invested (what we are looking for), r is the interest rate in decimal form, n is the number of times it compounds per year, and t is the time in years.  Fillling in:

$30,000=P(1+\frac{.04}{4})^{(4)(8)}$ and simplifying a bit:

$30,000=P(1+.01)^{32}$ and some more:

30,000 = P(1.374940697)

P = $21,819.12