How much would you have to invest at 8.5 percent interest,compounded quarterly, to have 5,000 after 6 years?

Question

jim_thompson5910 · Answer

Hint:

Use the formula

A = P(1 + r/n)^(nt)

where 

A = final amount
P = amount invested
r = interest rate
n = number of times compounded per year
t = number of years

jim_thompson5910 · Answer

In this case, 

A = 5000
P = x  (this is unknown)
r = 0.085
n = 4
t = 6

Plug all this in and solve for x to find the amount to invest

campbell_st · Answer

is you interest rate per annum or per quarter..?

anonymous · Answer

im guessing quarterly,,,im not sure....that's the question word for word.

jim_thompson5910 · Answer

it's most likely the annual interest rate

campbell_st · Answer

well I'd use the method shown above... lol... but it should be stated

anonymous · Answer

i've already tried the above method, and i failed horribly lol

jim_thompson5910 · Answer

A = P(1 + r/n)^(nt)


5000 = P(1 + 0.085/4)^(4*6)


5000 = P(1 + 0.02125)^(24)


5000 = P(1 + 0.02125)^(24)


5000 = P(1.02125)^(24)


5000 = P(1.65641696)


5000/(1.65641696) = P


3018.5636 = P


P = 3018.5636


P = 3018.56


So you need to invest 3018.56

anonymous · Answer

thank you so much love <3

jim_thompson5910 · Answer

you're welcome, I'm glad I could help you out

jim_thompson5910 · Answer

and hopefully it made sense?

anonymous · Answer

yes, it did, i wasnt sure how to solve it, i kept getting some weird numbers :P

jim_thompson5910 · Answer

alright that's great