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mojhsa [17]
3 years ago
9

A problem is listed below. Identify its type. Ted owns a small florist shop. Since his business is booming, his realizes he will

soon need one more delivery van. He decides he will purchase a full size van versus a minivan, which he currently owns. The van he is looking to buy in 2 years will cost him $33,000. How much should he invest each quarter into an account that pays 4% per year compounded quarterly, so that he can have the desired funds in 4 years?
Business
1 answer:
TEA [102]3 years ago
5 0

Answer:

Quarterly deposit=  $1,912.17

Explanation:

Giving the following information:

The van he is looking to buy in costs $33,000.

Interest rae= 4% per year compounded quarterly

Number of years= 4 years

First, we need to calculate the real interest rate:

Interest rate= 0.04/4= 0.01 per quarter

Now, to calculate the quarterly deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= quarterly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (33,000*0.01) / [(1.01^16)-1]

A= $1,912.17

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A good use of free cash flow is to Invest in nonoperating assets

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4,838,400

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Explanation:

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