Question

You deposit a lump sum today that in 8 years from now will be worth $17000. If the deposit earns 4% compounded quarterly. What's the present value of the investment?
Round your answer to two decimal places.

$

Answer 1

Using the compound interest formula,

A = P(1+r)^n

A = 17000

r = 4% quarterly

n = 8yrs = 32 quarters of a year

P = ?

17000 = P(1+4%)^32

P = $[17000/((1+4%)^32)]