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19 March, 15:31

Edward has decided to purchase a high - performance motorcycle. He'll need 9,500 in 3 years. His bank offers an interest rate of 8% compounded quarterly. How much does Edward need to deposit now to have enough money for his motorcycle in 3 years?

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  1. 19 March, 18:01
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    The formula is

    A=p (1+r/k) ^kt

    A future value 9500

    P present value?

    R interest rate 0.08

    K compounded quarterly 4

    T time 3 years

    We need to solve the formula for p

    P=A: (1+r/k) ^kt

    P=9,500: (1+0.08:4) ^ (4*3)

    P=7,490.7 round your answer to get

    P=7491
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