MATH SOLVE

2 months ago

Q:
# How much should you invest today if, in 6 years, you want to have $4000 in an account that pays 2.9% interest compounded quarterly? Assume that you will not make any payments into the account.

Accepted Solution

A:

Answer:$3363.30Step-by-step explanation:Let's begin with the compound amount formula:A = P(1 + r/n)^(nt), where n is the number of times interest is compounded per year, t is the number of years, P is the initial investment amount, and r is the interest rate as a decimal fraction.Solving for P, we get AP = ---------------------- (1 + r/n)^(nt)and so, with A = $4,000, r = 0.029, n = 4 and t = 6, we get: $4,000P = ----------------------------- = ($4,000) / (1.00725^24) , or (1 + 0.029/4)^(4*6)P = $4,000 / 1.1893 = $3363.30If you invest $3363.30 today, 2.9% compounded quarterly for 6 years, you will have $4000 after that period of time.