if a business wants to be able to save $200,000 to buy new production equipment in 4 years, how much will it have to invest every quarter at 6% interest?

Question

Must find the quarterly payments with 6% interest needed to raise $200,000 in four years.

Answer 1

A = p(1+r/n)^nt

 

200000 = p(1+.06/4)⁴⁽⁶⁾

solve for p

p = $139,908.78

 

If we invest $139,908.78 at 6% interest compounded

quarterly for six years we will have $200,000