.find the amount that should be invested to total 50,000 in 7 years.

Question

a company will need 50,000 in 7 years for a new addition. To met this goal, the company deposits money in an account today that pays 4% annual intrest compounded quarterly. find the amount that should be invested to total 50,000 in 7 year

Answer 1

You need to use the compounding quarterly formula: A=P(1+r/n)^nt

Where P is your starting amount, R is your interest rate, N is the number of compounds per year (4 compounds since it is quarterly) and T is time or amount of years.

 

A=50,000(1+0.4/4)^4x7=28

A=50,000(1+0.1)²⁸

A=50,000(1.01)²⁸

A=50,000(1.32)

A=$66,064.55