Inez wants to have $15,000 in 2 years. Use the present value formula to calculate how much Inez should invest now at 6 % interest, compounded quarterly in order to reach her goal.

a. $13,349.95
b. $13,315.65
c. $ 12,231.90
d. $ 11,877.98

Question

Inez wants to have $15,000 in 2 years. Use the present value formula to calculate how much Inez should invest now at 6 % interest, compounded quarterly in order to reach her goal.

a. $13,349.95
b. $13,315.65
c. $ 12,231.90
d. $ 11,877.98

anonymous · Answer

http://www.docstoc.com/docs/47589628/CHAPTER-11-QUIZ-A-COMPOUND-INTEREST-AND-PRESENT-VALUE

anonymous · Answer

does that help?

anonymous · Answer

no

anonymous · Answer

Can't open that at all

anonymous · Answer

It was only ur quiz. :(
Couldn't find any thing for you srry

anonymous · Answer

thanks

anonymous · Answer

Can I have a medal for my attempt?

anonymous · Answer

Ty!!!

anonymous · Answer

Future = (Present) (1.06)^2

Plug and chug.

ranga · Answer

Here is the compound interest formula: $$\Large A = P(1 + \frac{ r }{ n })^{nt}$$A = Amount at maturity = $15,000
P = Principal Amount = ?
r = Annual interest rate in decimal = 6% = 0.06
n = compounding period (compounded how many times a year) = 4 (quarterly compounding)
t = years invested = 2

Solve for P

anonymous · Answer

How would I solve this

anonymous · Answer

15000 = x (1.06)^2

ranga · Answer

15000 = P( 1 + 0.06/4)^(4*2) = P(1.015)^8
P = 15000 / (1.015)^8 = ?

anonymous · Answer

$13,315.65

ranga · Answer

@douglaswinslowcooper  Does your method take into account quarterly compounding?

anonymous · Answer

No, I missed that detail entirely. My apologies. You were right and I was wrong.

ranga · Answer

np @douglaswinslowcooper

@tashasp Yes, $13,315.67