I have the answer but can you tell me the steps on how she got it.

Question

anonymous · Answer

attachment

hero · Answer

$$FV = PV(1 + i)^t$$

anonymous · Answer

For the convenience of any helpers, I am retyping the data into this post:

Present value PV = 18,000
Future value FV = 25,695.04
Interest rate I = 2.75%
Compound frequency:  quarterly, or 4 times per year
Number of years=15

anonymous · Answer

it's compounded quarterly, 4 times per year, over 15 years... 60 compounding intervals

anonymous · Answer

so its 18,495 to the 60th power?

hero · Answer

Negative

anonymous · Answer

i dont get it

anonymous · Answer

What would the future value be if..?
present value= $20,000
interest rate= 3.75%
quarterly for 18 years?

anonymous · Answer

my teacher filled in the answer.

hero · Answer

I see

anonymous · Answer

it says "Calculate all values to 2 decimal places."

hero · Answer

I think your teacher is wrong

It is to two decimal places. Don't you see the two decimal places on the end?

anonymous · Answer

I think the problem is that interest rate, I = 2.75% is actually the annual interest rate, not the quarterly rate.

We need to compound each quarter at 2.75% divided by 4

hero · Answer

Okay, so it should be

$$FV = 18000\left(1 + \frac{.0275}{4}\right)^{60}$$

hero · Answer

Still get 27,152.25

anonymous · Answer

ok. thanks