Question

A company will need $60,000.00 in 5 years for a new addition. To meet this goal, the company deposits money in an account today that pays 3% annual interest compounded quarterly. Find the amount that should be invested to total $60,000.00 in 5 years

Answer 1

the formula for compound interest (if i remember correctly) is:

Total = Invested Amount * (1 + annual_rate/100)^(time)

since it's compounded quarterly for 5 years, then it's compounded 20 times, so the total, if your investment is P, will be P * (1 + 3/100)^(20)

= P * (1.03)^20 = 60,000

Hence P = 60,000/(1.03)^20

i could be wrong though